Experts in the financial field have predicted a slowdown in the country’s inflation rate for the month of July compared to the previous month when it was recorded at 34.19 percent.
This anticipation comes before the official release of the July 2024 inflation data by the National Bureau of Statistics, scheduled for Thursday.
According to the NBS report, the headline inflation rate surged in June to 34.19 percent from 33.95 percent in May, mainly due to increased food prices, particularly cereals and wheat.
Analysts have identified various factors such as ongoing insecurity in food-producing areas, continuous devaluation of the country’s currency, and issues in the food sector as contributors to the inflation spike.
As of June, food inflation was reported at 40.87 percent.
“Comparing on a year-on-year basis, there was a 15.62 percent increase from the rate recorded in June 2023 (25.25 percent). The climb in food inflation year-on-year was due to the higher prices of items like millet whole grain, garri, groundnut oil, and various fish products,” as highlighted in the NBS report.
Foreseeing a reduction, Senior Financial Market Analyst at FXTM, Lukman Otunuga, stated, “One of the significant themes in Nigeria in 2024 has been the escalating inflation, which hit 34.19 percent in June – the highest level since 1996. However, the upcoming CPI data is expected to show a moderation in prices in July, easing to 33.95 percent from the previous month’s 34.19 percent.”
He further mentioned, “With the Central Bank of Nigeria’s proactive measures in increasing rates, any signs of easing price pressures will be welcomed by consumers.”
In an economic update released on Tuesday, Meristem predicted a slowdown in food inflation for July 2024, driven by enhanced supply of essential food items like yam which resulted in price reductions.
“Key staples such as tomatoes and rice also witnessed a decline during the month. Additionally, the high comparison base from July 2023 is expected to moderate inflation figures for July.
“For the core index, a slight decrease is anticipated for July, primarily due to the high base comparison from July 2023. However, the naira’s depreciation during the month might counter some of this easing. Overall, we predict a deceleration in the July 2024 inflation rate driven by these factors,” as stated in Meristem’s economic update.
Hence, the firm expected headline inflation to decrease to 33.42 percent, compared to 34.19 percent in June 2024, with food inflation forecasted at 39.71 percent and core inflation at 27.29 percent for July 2024.
Afrinvest also projected a decline in inflation figures, primarily due to lowered food prices.
“According to our model, we estimate a 107bps decline in the headline rate to 33.12 percent in July. This expected drop is mainly due to the high base comparison. Additionally, the recent reduction in the prices of certain farm outputs should support this decline. We forecast a decline in the year-on-year food inflation rate to 40.4 percent from 40.9 percent in the previous month,” Afrinvest researchers mentioned.
They continued, “Looking beyond the positive inflation forecast for July, we believe that the timely implementation of recent policy moves to tackle rising food prices by the Federal Government could provide short-term relief from price pressures. Overall, assuming no major shocks in FX and energy prices, we expect the year-on-year headline rate to be on a downward trend for most of the second half of the year, starting from July, which should offer some relief to household purchasing power.”