Nigeria’s inflation rate fell for the fifth consecutive month in August, reaching 20.12%, down from 21.88% in July. This offers some hope to Nigerians battling high living costs. However, while the decline is celebrated, particularly for food prices, farmers argue that the cost of production and transportation remains unchanged, suggesting that any reduction in food prices may not be sustainable. They also assert that government policies are undermining local production, thus exacerbating food insecurity.
Economists believe that a combination of factors has contributed to this decline in inflation, including the appreciation of the naira, which has helped lower import costs, and a reduction in fuel prices, easing transportation expenses. Furthermore, a slowdown in the growth of money supply has also supported this moderation. However, despite these factors, many Nigerians report that their expenses have not dropped as expected. Inflation may be slowing, but it does not necessarily mean prices are actually falling for consumers.
Bismarck Rewane, a prominent economist and CEO of Financial Derivatives Company, explained the 16% drop in egg prices from last year: “Egg prices have fallen by 16% compared to last year due to a variety of factors, including better supply and lower production costs.” While this is a positive shift, he cautions that such price reductions may not be indicative of broader trends in the food market.
The rebasing of inflation data has also played a role in the apparent moderation. With food’s proportion in the inflation basket reduced from 54% to 44%, this technical adjustment has impacted the reported figures. Despite these changes, Nigeria still faces considerable challenges, especially due to its heavy reliance on oil revenue, which remains vulnerable to global price fluctuations.
Experts warn that while the reduction in inflation is encouraging, sustainable economic growth will require significant infrastructure development, particularly in the energy sector. The country’s ongoing power shortages and high energy costs remain significant barriers to reducing production costs and fostering industrial growth.
Ultimately, while the drop in inflation is a positive trend, its real impact will depend on whether these policies can improve the everyday lives of Nigerians. If the government’s economic measures do not lead to tangible improvements in living standards. See, More, Here>>>>
