Nigeria’s inflation rate dropped to its lowest level in six months during August, potentially providing the Central Bank of Nigeria an opportunity to pause its aggressive monetary tightening cycle.
This comes ahead of the monetary policy committee’s meeting next week, according to Bloomberg.
The National Bureau of Statistics reported that consumer prices rose by 32.2% in August, down from 33.4% in July.
This aligns with the median forecast of nine economists surveyed by Bloomberg, and signals a significant shift in the inflationary trend that had been accelerating over the past year.
The moderation in inflation can be attributed to several factors, including a reduced impact from the currency devaluation and the earlier removal of fuel subsidies.
These reforms were part of a broader economic strategy implemented by President Bola Tinubu after assuming office in May 2023.
His administration’s efforts to attract foreign investment, liberalize the exchange rate, and reduce fiscal deficits have all played a role in stabilizing inflationary pressures.
Additionally, agricultural conditions have contributed to easing inflation. The country saw improved corn yields, and a six-month window for duty-free imports of both corn and wheat further supported the reduction in price pressures.
These developments have softened the cost-push inflation experienced in previous months.
However, the data does not capture the impact of a 45% hike in gasoline prices, which occurred in early September.
The price increase led to a rise in transportation costs, but since the data collection concluded before mid-August, these effects are yet to reflect in official inflation figures.
This inflation slowdown may influence the CBN’s monetary policy stance, as the committee has raised the benchmark interest rate sharply—from 11.5% to 26.75%—over the past two years in an effort to curb inflation.
With the inflation outlook softening, the monetary policy committee may use its meeting on September 24 to assess the effect of recent factors such as fluctuations in the naira, severe flooding in northeastern Nigeria, and the gasoline price surge on inflation.
Food inflation, which has been a major driver of the overall rate, eased to 37.5% in August, down from 39.5% in the previous month.
However, core inflation, which excludes volatile items like food and energy, saw a marginal uptick to 27.6%, compared to 27.5% in July. This slight rise in core inflation highlights the ongoing underlying pressures in the economy, despite the broader trend of easing price growth.
Nigeria’s inflation rate dropped to its lowest level in six months during August, potentially providing the Central Bank of Nigeria an opportunity to pause its aggressive monetary tightening cycle.
This comes ahead of the monetary policy committee’s meeting next week, according to Bloomberg.
The National Bureau of Statistics reported that consumer prices rose by 32.2% in August, down from 33.4% in July.
This aligns with the median forecast of nine economists surveyed by Bloomberg, and signals a significant shift in the inflationary trend that had been accelerating over the past year.
The moderation in inflation can be attributed to several factors, including a reduced impact from the currency devaluation and the earlier removal of fuel subsidies.
These reforms were part of a broader economic strategy implemented by President Bola Tinubu after assuming office in May 2023.
His administration’s efforts to attract foreign investment, liberalize the exchange rate, and reduce fiscal deficits have all played a role in stabilizing inflationary pressures.
Additionally, agricultural conditions have contributed to easing inflation. The country saw improved corn yields, and a six-month window for duty-free imports of both corn and wheat further supported the reduction in price pressures.
These developments have softened the cost-push inflation experienced in previous months.
However, the data does not capture the impact of a 45% hike in gasoline prices, which occurred in early September.
The price increase led to a rise in transportation costs, but since the data collection concluded before mid-August, these effects are yet to reflect in official inflation figures.
This inflation slowdown may influence the CBN’s monetary policy stance, as the committee has raised the benchmark interest rate sharply—from 11.5% to 26.75%—over the past two years in an effort to curb inflation.
With the inflation outlook softening, the monetary policy committee may use its meeting on September 24 to assess the effect of recent factors such as fluctuations in the naira, severe flooding in northeastern Nigeria, and the gasoline price surge on inflation.
Food inflation, which has been a major driver of the overall rate, eased to 37.5% in August, down from 39.5% in the previous month.
However, core inflation, which excludes volatile items like food and energy, saw a marginal uptick to 27.6%, compared to 27.5% in July. This slight rise in core inflation highlights the ongoing underlying pressures in the economy, despite the broader trend of easing price growth.
