Dear Subscriber,

NBS released its July inflation number today and surprisingly, the price level slid by 0.79% to 33.40%. This marks the first deceleration in the last 19 months. This sharp decline is partly due to waning base-year effects, erosion of consumer purchasing power, and a stable naira in the forex market. However, the price survey could have been affected by expectations.  Interestingly, all the sub-indices except core inflation moved in tandem with the headline inflation indicating that core inflation, which is a structural issue, remains potent.

The food basket index declined by 1.34% to 39.53% from 40.87% in the month of June. Contrarily, core inflation, which excludes the prices of volatile agricultural produces and energy rose to 27.47% from 27.40%. Whereas month-on-month inflation declined to 2.28% from 2.31% in June.

Decline in inflation after 19 months – A glimmer of hope for the cost-of-living crisis

After 19 months of spiraling inflationary pressure, a recent decline could provide a glimmer of hope for the cost-of-living crisis. While prices aren’t necessarily falling, the slower pace of inflation is a positive sign that economic pressures might be starting to recede. However, the impact of months of high inflation will linger, and the cost-of-living crisis won’t be resolved overnight. Nonetheless, the recent decline in inflation is a welcome development, offering some relief and a potential path toward economic stability.

Outlook

The downward trend in inflation brings the CBN closer to its target of price stability. However, CBN is likely to maintain status quo at its next MPC meeting in September to monitor inflation trends in the coming months.

In the download and link below, the FDC Think Tank shares its thoughts on the impact of July’s inflation numbers on the economy.

Enjoy your read…