Dear Subscriber,

NBS released Nigeria’s official inflation report today. As widely anticipated and in line with consensus opinion inflation increased but only mildly to 34.19%. The major drivers of inflation at this time remains the food basket at 40.80%. The items include the usual suspects like Millet, Garri, yam, groundnut oil, palm oil, etc. Noticeably, absent from the food items are the proteins, e.g. meat, eggs, and chicken.

At 34.19% Nigeria’s inflation is now at a 28-year high and has increased for 19 months consecutively. Even though the trend of inflation is slowing, we noticed that urban and rural inflation differential narrowed. This is surprising given the increase in the price of gasoline and the emergence of petrol queues in the month of June.

Let’s not be fooled by June inflation – July will tell a different story

The month of June 2024 compared to the prior year was not a typical month as Nigeria suffered from high flood and petrol shortages. Moreover, there was an interesting coincidence of public holidays in June. The celebrations and activities pushed up demand for food products. The full effect of these developments will manifest in the July inflation figures which are expected to be higher than the June numbers. One major development to look out for in July is the imminent passing of a new minimum wage law. From all indications, the effect of a new minimum wage will trigger cost-push inflation.

In spite of the July inflation outlook, we are still of the view that the CBN will maintain the status quo at its next meeting on July 22nd and 23rd.

In the download and link below, the FDC Think Tank projects June inflation numbers and their impact on businesses and the economy.

Enjoy your read!