Lagos — Nigeria’s annual inflation rate decreased to a six-month low in August, creating a potential opportunity for the Central Bank of Nigeria (CBN) to halt its rigorous tightening cycle at its upcoming meeting next week.
According to a statement from the National Bureau of Statistics (NBS) published on Monday, consumer prices rose by 32.2% in August, down from 33.4% in July. This reduction aligns with the median estimate from nine economists surveyed by Bloomberg.
The easing inflationary pressures are attributed to several factors, including the diminished impact of currency devaluation and the temporary removal of fuel subsidies introduced by President Bola Tinubu’s administration since May 2023. These measures were part of broader economic reforms aimed at attracting investment, floating the currency, and reducing budgetary constraints.
Additional contributing factors include improved corn yields and a six-month window for importing crops and wheat duty-free, which have helped soften the rate of price increases.
However, data collection for August concluded before mid-month, so the impact of a recent 45% increase in gasoline prices, which led to a rise in transport costs, was not reflected in this report. This price hike could potentially affect the inflation figures in the coming months.
The slowdown in inflation provides the CBN’s Monetary Policy Committee, which is set to meet on September 24, with a critical opportunity to assess whether to pause its aggressive tightening cycle. Over the past two years, the central bank has raised its benchmark rate from 11.5% to 26.75% in response to rising inflation.
Food inflation also moderated to 37.5% in August from 39.5% in July, while core price growth, which excludes agricultural and energy products, slightly increased to 27.6% from 27.5%.
The central bank will need to weigh the effects of recent currency volatility, severe flooding in northeastern Nigeria, and rising gasoline prices on the overall inflation landscape before making its decision.
