Nigeria’s Inflation Rate Moderately Rises to 22.79% in June 2023, Surprising Analysts

Nigeria’s inflation rate experienced a moderate increase, reaching 22.79% year-on-year in June 2023, surpassing analysts’ expectations. This rise comes amidst ongoing reforms in the petroleum and foreign exchange sectors, which have led to higher prices. The National Bureau of Statistics (NBS) reported that the food inflation rate also accelerated to 25.25% year-on-year in June, compared to 24.82% in May.

According to the NBS, the headline inflation rate in June 2023 was 4.19 percentage points higher than the rate recorded in June 2022, which stood at 18.6%. Both urban and rural inflation rates experienced significant increases compared to the previous year, with urban inflation reaching 24.33% (5.23 percentage points higher) and rural inflation at 21.37% (3.25 percentage points higher).

The surge in food inflation was attributed to the rising prices of oil and fat, bread and cereals, fish, potatoes, yam and other tubers, fruits, meat, vegetables, milk, cheese, and eggs.

Analysts from CardinalStone Research expressed surprise at the lower-than-expected inflation rate, noting that the core inflation basket experienced a positive surprise. Despite anticipated inflationary pressures due to the removal of subsidies and increased parallel market rates, the latest report revealed a 7 basis points moderation in core inflation.

However, analysts at Cordros Research foresee continued pressure on food inflation in July. They expect higher transport costs to filter into food prices, along with the potential termination of the Black Sea grain deal by Russia. Moreover, the lean season in the north, coupled with significant flooding in the southern region, is expected to widen the food demand-supply gap, leading to an estimated 2.10% rise in food prices for July.