Wednesday, May 29, 2024

The government of Nigeria has issued a declaration of a food price crisis in the wake of fresh data from the National Bureau of Statistics (NBS) revealing a 0.38% rise in the nation’s inflation rate to 22.79%. The NBS cautions that the data for June does not entirely reflect the effects of the fuel subsidy elimination and the recent unification of the exchange rate.

Naira Devaluation

As per the latest statistics from the Nigerian National Bureau of Statistics, the inflation rate for June increased to 22.79%. This near 0.4% leap from the May figure of 22.41% marks the sixth successive rise, leading to the Nigerian government’s crisis declaration.

The NBS’s newest report also highlights that the “headline inflation rate was 4.19% points higher compared to the rate recorded in June 2022, which was 18.60%.” Further, the NBS data reveals that only December 2022 has seen a dip in the inflation rate in the last year.

Previously, Nigerian officials have linked the inflation rate upswing to the weakening of the naira. However, the Bola Ahmed Tinubu-led government, inaugurated as Nigeria’s president in late May, fulfilled its promise to abolish the long-standing fuel subsidy. This action reportedly led to more than a 100% increase in petrol prices.

Ramifications of Subsidy Abolition

In a discussion about the potential repercussions of the subsidy abolition, the NBS indicated via a tweet that the data collected doesn’t fully illustrate the effects of the petrol price hike. They added:

Data collection for the computation of the reference month’s rate typically concludes by mid-month, suggesting that the June figures reflect only around two weeks of the policy’s influence on consumer prices.

NBS further noted that the complete impact of the policy alteration would become evident “in subsequent months.”

Alongside the subsidy abolition, the naira’s devaluation in early June from roughly NGN470 per dollar to over NGN700 per dollar is also considered a contributing factor to the slight rise in the inflation rate.

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Frequently Asked Questions (FAQs) about Nigeria food price crisis

What led the Nigerian government to declare a food price emergency?

The Nigerian government declared a food price emergency following a 0.38% increase in the country’s inflation rate, as reported by the National Bureau of Statistics (NBS). This was the sixth consecutive increase in the rate, which rose to 22.79% in June.

What are some factors contributing to the inflation rate in Nigeria?

Contributing factors include the depreciation of the naira and the removal of a long-standing fuel subsidy. The latter action, fulfilled by the Bola Ahmed Tinubu-led government, led to more than a 100% increase in petrol prices. Moreover, the naira’s devaluation from roughly NGN470 per dollar to over NGN700 per dollar is also believed to have contributed to the rise in the inflation rate.

Does the current inflation rate fully reflect the impact of the fuel subsidy removal and the exchange rate unification?

No, the NBS has stated that the June inflation figure does not fully capture the impact of these factors. Data collection typically concludes by the middle of the month, meaning that the June figures only reflect about two weeks of the policy changes’ impact on consumer prices. The full effect will only be evident in subsequent months.

What was the inflation rate in Nigeria a year ago?

In June 2022, the inflation rate in Nigeria was 4.19% points lower, standing at 18.60%.

When did the inflation rate drop in the past year?

In the past twelve months, December 2022 was the only month when the inflation rate dropped in Nigeria.

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5 comments

James_K July 19, 2023 - 10:48 pm

wow, things really heating up in Nigeria. hope they can get inflation under control soon!

Reply
African_diaspora July 19, 2023 - 11:51 pm

makes me sad. My family’s back there and it’s hard to watch them go through this. God help Nigeria!

Reply
Rita_on_the_go July 20, 2023 - 9:18 am

It’s always the common man who suffers. Imagine prices of food going through the roof. The govt needs to do better.

Reply
Economic_Whiz July 20, 2023 - 1:13 pm

The decision to remove fuel subsidy was always gonna have implications. Interesting to see how this unfolds in the next few months.

Reply
CryptoHound July 20, 2023 - 6:53 pm

Seems like a good time to invest in Nigerian Crypto! Their fiat currency is going down.

Reply

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