Inflation rate falls for the first time in 19 months

Headline inflation fell to 33.40% in July from 34.19% in May, the first decline since December 2022.

It seems that the CBN's four interest rate hikes in the last five months are finally having a positive effect on the economy.

This could also mean that the market has adapted to the policies initiated by the President when he took office in June 2023 – elimination of fuel subsidies and flexible exchange rates.

Headline inflation fell by 0.80 percentage points between June and July. Finance Minister Wale Edun attributed the inflationary pressure so far to food inflation.

The new Consumer Price Index (CPI) for July supported his thesis, as headline inflation fell just as food inflation fell to 39.53 percent in July from 40.87 percent in June.

This represents a decline in the food inflation rate of 1.34 percentage points. It is also the first decline in 19 months.

Although headline inflation and food inflation declined, core inflation, which excludes food and energy prices, rose 0.07 percentage points to 27.47% in July from 27.40% in June.

According to the NBS, core inflation includes the costs of accommodation, transportation, clothing, health, communications, etc., excluding food and energy costs.

This confirms the CBN’s statement that food inflation is the main driver of the inflation rate in Nigeria.

As Mr Edun noted, “intervention programmes continue to be underway to reduce the cost of living and increase growth in the various sectors of the economy.”

“Efforts will continue to ensure that interventions and measures to alleviate the high cost of living for individuals, the agricultural sector, industry and small businesses continue to be implemented with all the efforts necessary for success.