Mixed reactions as inflation eases to 17.38 per cent in July

The headline inflation slowed for the fourth consecutive month in July from a year-on-year (YoY) growth of 17.75 per cent reported in June to 17.38 per cent.

This was contained in the consumer price index (CPI) released by the National Bureau of Statistics (NBS) yesterday. The CPI measures the changes in prices of goods and services over time using a weighted average.

July’s headline inflation rate is 0.37 percentage points lower than the rate reported in June, showing that the inflation rate increased at a slower speed.

The month-on-month inflation rate stood at 0.93 per cent against 1.06 per cent recorded the previous month, according to the NBS data.

The core inflation, which measures others but the less volatile item (food), was 13.72 per cent YoY while the food segment remained extremely high at 21.03 per cent. This puts the differential between core and food inflation at 7.31 per cent.

In simpler terms, prices of food items increase at about 50 per cent as fast as core other items. Economists have called on the government to treat the rising food crisis as an emergency issue.

The country’s headline inflation has increased consistently for three years until the April breather when it decelerated from 18.17 per cent to 18.12 per cent. Since then, the growth has remained downward, according to data supplied by NBS.

But some experts have balked at the figures released by the statistics office, saying there is no empirical evidence in the market pointing to slowing inflation.

Godwin Owoh, a professor of applied economics, faulted NBS figures, saying headline inflation would be well over 20 per cent when conducted by a politically neutral party.

But a former Director-General of the Lagos Chamber of Commerce and Industry, Dr. Muda Yusuf, said the figures were real and that the decoration trend is triggered by a base effect.

Professor of Capital Market at the Nasarawa State University, Keffi, Uche Uwaleke, said it is cheering to note that headline inflation dropped again in the month of July for the 4th consecutive time since April 2021.

According to him, the deceleration in inflation rate would facilitate monetary policy implementation and reduce incentive for speculative activities in the forex market, even as more people begin to increase their fate in the domestic currency.

‘The current disinflation will support the value of the naira. It will equally send a positive signal to foreign and domestic investors regarding macroeconomic stability in Nigeria as well as facilitate the rebound of the stock market.’

Uwaleke also expressed doubt on the sustainability of the deceleration, considering the risks to inflation outlook, which are still present.

According to the latest figure, the general price increase was fastest in Kogi (22.49 per cent), Bauchi (22.04 per cent) and Kaduna (20.42 per cent) while Akwa Ibom/River, Delta and Kwara recorded the slowest increase at 15.78 per cent, 15.4 per cent and 14.53 per cent respectively.

“The urban inflation rate increased by 18.01 per cent year-on-year in July 2021 from 18.35 per cent recorded in June 2021 while the rural inflation rate increased by 16.75 per cent in July 2021 from 17.16 percent in June 2021. On a month-on-month basis, the urban index rose by 0.98 per cent in July 2021 down by 0.11 points against the rate recorded in June 2021 (1.09 per cent) while the rural index also rose by 0.87 per cent in July 2021, down by 0.15 per cent points over the rate that was recorded in June 2021 (1.02 per cent),” NBS also revealed.