Inflation change is projected to slow further to 2.26 per cent Month On Month (MOM) in August, representing 32.21 per cent on year on year basis.
According to the Codros Capital Research, the projection is hinged on anticipation of further reduction in food inflation primarily driven by the ongoing green harvest and a reduced exchange rate pass-through on imported food products.
Recall that Monetary Policy Committee (MPC) of the current administration has increased the interest rate upto four consecutive times from 18.75 per cent in November 2023 to 26.75 per cent in July, 2024 since their assumption of office in September 2023.
However, this effort by the Central Bank of Nigeria ( CBN) to deploy conventional interest rate hike to tackle rising inflation is yielding meaningful result as the rate of headline inflation moderated to 33.40 per cent year on year in July, a sign that the surging inflation that has gripped the nation’s economy is finally abating.
According to the latest report from the National Bureau of Statistics (NBS), the Consumer Price Index ( CPI), which measures the rate of change in prices of goods and commodities eased for the first time in 19 months mainly due to the high statistical base from the prior year.
The report indicated that headline inflation moderated by 80bps to 33.40 per cent YOY in July from 34.19 per cent in June 2024.
“We highlight that food prices (-134bps to 39.53 per cent yoy) moderated after eighteen consecutive months of increase, while the core inflation (+6bps to 24.47 per cent yoy) rose marginally. On a month-on-month basis, headline inflation slowed by 3bps to 2.28 per cent mainly due to a moderation in food prices.
“Looking ahead, we anticipate further moderation in food inflation primarily driven by the ongoing green harvest and a reduced exchange rate pass-through on imported food products.
However, the analysts predicted an uptick in PMS prices due to supply constraints to push core inflation higher.
“On a balance of factors, we forecast headline inflation to moderate marginally by 2bps to 2.26 per cent mom in August, translating to a 119bps slowdown in the yoy inflation rate to 32.21 per cent.”
Also, Cowry Research observed a positive trend reversal in both headline and food inflation, marking a significant development after nearly 30 months of continuous inflationary pressure.
“This moderation, the first since January 2022, is seen as a result of coordinated efforts by Nigeria’s monetary and fiscal authorities,” it added.
Also the U.S economy witnessed a moderation in its July inflation rate to 2.9 per cent, its lowest post pandemic level, according to the CPI report.
The report said:” On a 12-month basis, the Consumer Price Index (CPI) cooled to 2.9 per cent, down from three per cent in June — the first time the index dipped beneath three per cent since March 2021. Month over month, it rose 0.2 per cent after falling 0.1 per cent in June.
“The latest reading adds to growing signs that the swift price increases consumers have suffered since the pandemic is finally ebbing.”
