Nigeria’s Inflation Slows: Is Stability Really Here?

Nigeria’s inflation rate dipped to 16.05% in October, according to the National Bureau of Statistics (NBS). That’s a drop from 18.02% the previous month. CPPE’s Dr. Muda Yusuf calls it a “significant win,” citing a “sharp moderation.” A welcome change, yes, but let’s examine this further.

Year-on-year, inflation is down substantially compared to October of last year. Still, month-on-month figures reveal a slight uptick, suggesting the rate at which average prices increase was actually higher in October than in September. This warrants a closer look.

Food inflation also saw a yearly decrease. Intriguingly, the NBS points to a change in the base year as a major factor, prompting you to examine the numbers with added awareness. Certain food items like onions and fruits experienced price increases.

Core inflation, excluding volatile agricultural products and energy, reveals similar trends.

Looking at individual states, the picture is mixed. Ekiti, Nasarawa, and Zamfara experienced the highest inflation, while Bauchi, Anambra, and Gombe saw the lowest. This geographic variation underscores the uneven economic pressures across the country.

What’s driving this overall downward trend? CPPE credits exchange rate stability, improving macroeconomic fundamentals, and better policy coordination. It’s true, tighter monetary policies and increased FX market liquidity probably contribute.

Yet, some unresolved structural constraints continue to impede meaningful price relief. Logistics costs, high energy prices, and climate change all play a role. These aren’t easily fixed and impact the speed at which disinflation turns into real benefits for Nigerians.

Five key sectors – food, transport, housing, education, and health – account for the bulk of the inflationary burden. Managing these sectors effectively is crucial.

Strengthening food systems through irrigation and climate-resilient farming seems crucial. Continued reforms across various sectors are also needed to translate disinflation into real cost-of-living improvements. The CBN, Finance Ministry, and other agencies must cooperate.

Has inflation peaked in Nigeria? It’s tempting to declare victory, but I’ve observed similar patterns before. Sustaining these gains requires more than just surface-level adjustments. Until these underlying issues receive proper attention, any celebration should be cautiously optimistic.

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