Saturday 21 Sep 2024 {HMC} The high inflation rate in Nigeria dropped slightly in August, but a decline in the value of the nairia and a continued increase in fuel prices are eroding the slight gains and threatening to reignite the inflationary trend.
Michael Anthony, an engineer and father of four, still faces high costs despite the small drop in inflation, which fell from 33.40% in July to 32.15% in August. His household expenses remain steep, with no real relief in sight.
“In the month of July, I bought a bag of rice at the rate of 65,000 naira, but … three days ago, I bought a bag of rice for 95,000 naira,” he said. “If you want to buy anything, price has risen because of the price of fuel. I’m worried that inflation rate might rise again.”
At a market in a suburb of Abuja, food trader Blessing Ochuba is also struggling. With customers unable to buy in bulk, she’s cutting back her stock and adjusting prices to stay in business.
Ochuba said patronage has been slow despite the reported dip in inflation rate.
“People that normally buy in bags, they now buy like half or quarter … because they can no longer afford to buy for now,” she said. “I used to buy like 10 bags of rice, but now I cannot afford to buy five. Honestly, I did not see the coming down, everything is going higher.
“It’s on the high side, and it is really affecting us.”
Despite lower inflation, Nigeria’s currency has weakened from 1,200 to 1,600 to the dollar, and gasoline prices have soared from 620 to nearly 1,000 naira per liter over the past three months.
Development economist Hauwa Mustapha credited a government policy in which food imports were not subject to excise duty for 90 days for the slight inflation drop.
“I think that helped a lot, and that also helped for them to boost the supply of food. … It does not indicate a long-term recovery,” she said, adding that a lasting recovery will depend on government measures.
“What the government can do to manage inflationary pressure for both short term and long term, I think for now, is to concentrate policy action in the area of food supply,” Mustapha said.
“Thankfully, we are approaching the harvest season. Typically, in Nigeria, we also know that we experience a lot of post-harvest loss. This is … the time for the country to manage the harvest, particularly control [and] minimize post-harvest losses, so that we can keep the food supply steady.”
Experts say the government’s next steps will determine whether this inflation dip signals a recovery or just temporary relief.
