Nigeria’s Inflation Rate Drops for the First Time in 19 Months, Now at 33.40%

Nigeria’s inflation rate has dropped for the first time in 19 months, according to the latest report from the National Bureau of Statistics (NBS). In July 2024, the country’s headline inflation rate fell to 33.40%, down from 34.19% in June 2024. This marks a significant moment, as it is the first decline since December 2022 when the inflation rate was 21.34%.

The decrease in the inflation rate by 0.79 percentage points between June and July 2024 is seen as a positive development. However, when compared to July 2023, the year-on-year inflation rate is still 9.32 percentage points higher, reflecting a rise from 24.08% to the current 33.40%.

On a month-to-month basis, the inflation rate in July 2024 was recorded at 2.28%, slightly lower than the 2.31% observed in June 2024. The food and non-alcoholic beverages sector was the largest contributor to the inflation, making up 17.30% of the year-on-year increase. Other significant contributors included housing, water, electricity, gas, and other fuels, accounting for 5.59%.

However, core inflation, which excludes volatile items such as agricultural products and energy, also saw a rise. It reached 27.47% in July 2024 on a year-on-year basis, up by 6.99 percentage points from 20.47% in July 2023. The month-on-month core inflation rate also experienced a slight increase, moving from 2.06% in June 2024 to 2.16% in July 2024.

The report from NBS highlighted that the twelve-month average core inflation rate stood at 24.65% for the period ending in July 2024. This represents a significant increase of 5.81 percentage points from the 18.84% recorded in July 2023.

Additionally, food inflation, a major concern for many Nigerians, showed a slight decline in July 2024. The food inflation rate was 39.53% on a year-on-year basis, up from 26.98% in July 2023, marking an increase of 12.55 percentage points. This rise was primarily driven by higher prices of items such as semovita, yam flour, and wheat flour.

However, on a month-to-month basis, food inflation dropped slightly to 2.47% in July 2024, down from 2.55% in June 2024. This decrease is attributed to slower price increases in several food items, including tinned milk, baby powdered milk, mudfish, fresh fish, snail, date palm fruit, watermelon, garri, and fufu.

Whereas, urban inflation continued to rise, reaching 35.77% on a year-on-year basis in July 2024, which is 9.94 percentage points higher than the 25.83% recorded in July 2023. On a month-to-month basis, urban inflation was stable, with a slight decrease to 2.46% in July 2024 from the same rate in June 2024.

The twelve-month average urban inflation rate was reported at 32.89% in July 2024, showing an increase of 10.02 percentage points from the 22.87% recorded in July 2023.

Rural inflation also saw a year-on-year increase, reaching 31.26% in July 2024, up by 8.77 percentage points from 22.49% in July 2023. On a month-to-month basis, rural inflation decreased slightly to 2.10% in July 2024, down from 2.17% in June 2024. The twelve-month average rural inflation rate stood at 28.86% in July 2024, up by 7.82 percentage points from 21.04% in July 2023.

The decline in inflation rates, although small, offers a glimmer of hope for Nigerians who have been struggling with rising costs of living. The NBS report suggests that while the drop in inflation is a positive sign, the overall economic situation remains challenging, with core inflation and food prices still significantly higher than in previous years.