Analysts have said that the still-tight monetary policy conditions of the Central Bank of Nigeria (CBN) will help sustain the downtrend in inflationary pressures. Besides, they claimed that a combination of fiscal and monetary policy alignment will boost a holistic approach to structural challenges in downtrend in inflationary pressures......See Full Story>>.....See Full Story>>
They advocated the need for the Central Bank of Nigeria (CBN) to adopt a more flexible and predictable foreign exchange management model to regain the confidence of foreign investors.
The Nigeria Bureau of Statistics (NBS), had recently said that food inflation rate in July 2024 was 39.53 per cent on a year-on-year basis, 12.55 per cent points higher compared to the rate recorded in July 2023 (26.98%).
“In July 2024, the headline inflation rate eased to 33.40% relative to the June 2024 headline inflation rate of 34.19%. Looking at the movement, the July 2024 headline inflation rate showed a decrease of 0.8% points when compared to the June 2024 headline inflation rate. On a year-on-year basis, the headline inflation rate was 9.32% points higher compared to the rate recorded in July 2023, which was 24.08%.
“This shows that the headline inflation rate (year-on-year basis) increased in July 2024 compared to the same month in the preceding year, July 2023. Furthermore, on a month-on-month basis, the headline inflation rate in July 2024 was 2.28%, which was 0.03% lower than the rate recorded in June 2024 (2.31%). This means that in July 2024, the rate of increase in the average price level was lower than the rate of increase in the average price level in June 2024.
The percentage change in the average CPI for the twelve months ending July 2024 over the average of the CPI for the previous twelve-month period was 30.76%, showing an 8.84% increase compared to the 21.92% recorded in July 2023.
Cordros securities Researchers in their Weekly Economic and Market Report of 16-August-2024, stated that from NBS report, consumer prices eased for the first time in 19 months, mainly due to the high statistical base from the prior year.
This indicated that headline inflation moderated by 80bps to 33.40% y/y in July (June: 34.19% y/y).
“We highlight that food price, -134bps to 39.53% y/y, moderated after eighteen consecutive months of increase, while the core inflation (+6bps to 24.47% y/y) rose marginally.
“On a month-on-month basis, headline inflation slowed by 3bps to 2.28% (June: 2.31% m/m), mainly due to a moderation in food prices. Looking ahead, we anticipate further moderation in food inflation primarily driven by the ongoing green harvest and a reduced exchange rate pass-through on imported food products.
“We expect an uptick in PMS prices due to supply constraints to push core inflation higher. On a balance of factors, we forecast headline inflation to moderate marginally by 2bps to 2.26% m/m (July: 2.28% m/m) in August, translating to a 119bps slowdown in the y/y inflation rate to 32.21% (July: 33.40% y/y)”, they said.
Dr Muda Yusuf, Chief Executive Officer of the Centre for Promotion chat with Daily Independent, said the central bank’s insistence on lowof Private Enterprise (CPPE), in a ering inflation may signal more hikes in subsequent months.
He said: “To address the looming catastrophe, the fiscal and monetary authorities must adopt a more flexible and predictable foreign exchange management model to regain the confidence of foreign investors.
Yusuf, who argued that the technical computation of the inflation figures is not in dispute, said: “the reality of the impact of the intense inflationary pressures over the past one year is at variance with the official inflation data.
“For the basket of goods consumed by most households, prices have jumped by between 30-100% over the past one year. The same is true of businesses.
“The pressure of spiking inflation on household budgets has been intense and distressing. Purchasing power has been massively eroded, real incomes have collapsed, and the poverty situation has consequently worsened.
“Businesses have been similarly impacted as they have been experiencing a slump in sales, turnover and profits margins. The impact on small businesses is even more severe because of their limited capacity to absorb economic shocks.
“The spiraling inflation dynamics deserves an urgent policy response at the highest level of government. The impact on citizens’ welfare is severe. The effect on SMEs is troubling. There is worsening social discontent, driven by poverty inflicted by inflation.
Mr. Adewale Oyerinde, Director General of Nigeria Employers’ Consultative Association (NECA), in a chat with Daily Independent, advised the Federal Government to ensure actionable, consistent and coherent fiscal, trade and monetary policies by promoting high level actions on policy coordination and ownership, unified voice on policy pronouncement, setting the right tone at the top, revamp reform on Ease of Doing Business, evaluate policies based on deliverables
An executive director of a new generation commercial bank, who craves anonymity told Daily Independent, that: “there may be further moderation in food inflation primarily driven by the ongoing green harvest and a reduced exchange rate pass-through on imported food products.
“We estimate headline inflation to moderate marginally by 2bps to 2.26% m/m (July: 2.28% m/m) in August, translating to a 119bps slowdown in the y/y inflation rate to 32.21% (July: 33.40% y/y)”.