INFLATION: Rise in Food Prices Pushes Nigeria’s Inflation to 22.41% in May 2023.

The Nigeria Bureau of Statistics (MBS) says that the headline inflation rate for Nigeria in May increased to 22.41% relative to the April 2023 figure of 22.22%. This was contained in the report released by the statistics office on Thursday, June 15, 2023.

Looking at the movement, the May 2023 inflation rate showed an increase of 0.19% points when compared to April 2023 headline inflation rate. Similarly, on a year-on-year basis, the headline inflation rate was 4.70% points higher compared to the rate recorded in May 2022, which was (17.71%). This shows that the headline inflation rate (year-on-year basis) increased in the month of May 2023 when compared to the same month in the preceding year (i.e., May 2022).

Likewise, on a month-on-month basis, the headline inflation rate in May 2023 was 1.94%, which was 0.03% higher than the rate recorded in April 2023 (1.91%). This means that in the month of May 2023, on the average, the general price level was 0.03% higher relative to April 2023.

The percentage change in the average CPI for the twelve months period ending May 2023 over the average of the CPI for the previous twelve months period was 21.20%, showing 4.75% increase compared to 16.45% recorded in May 2022.

Food Inflation Prints at 24.83% YoY

The Food inflation rate in May 2023 was 24.82% on a year-on-year basis; which was 5.33% points higher compared to the rate recorded in May 2022 (19.50%). The rise in food inflation on a year-on-year basis was caused by increases in prices of Oil and fat, Yam and other tubers, Bread and cereals, Fish, Potatoes, Fruits, Meat, vegetables, and spirits. On a month-on-month basis, the Food inflation rate in May 2023 was 2.19%, this was 0.06% higher compared to the rate recorded in April 2023 (2.13%). The average annual rate of Food inflation for the twelve months ending May 2023 over the previous twelve-month average was 23.65%, which was 4.97 % points increase from the average annual rate of change recorded in May 2022 (18.68%).

Core Inflation

The “All items less farm produce” or Core inflation, which excludes the prices of volatile agricultural produce stood at 20.06% in May 2023 on a year-on-year basis; up by 5.16% when compared to the 14.90% recorded in May 2022. The highest increases were recorded in prices of Gas, Passenger transport by Air, Liquid fuel, Vehicle spare parts, Fuels, and lubricants for personal transport equipment, medical services, Passenger transport by road etc. On a month-on-month basis, the Core inflation rate was 1.81% in May 2023. It stood at 1.46% in April 2023, up by 0.35%. The average twelve-month annual inflation rate was 18.33% for the twelve months ending May 2023; this was 4.50% points higher than the 13.83% recorded in May 2022.

Outlook: Inflation to continue northwards amid fuel subsidy removal, exchange rate liberalization, others

We expect the inflation rate to continue to rise in the nearest months. The impact of fuel subsidy removal would impact the inflation rate in June. Also, the impact of the floated exchange rate (I & E window), which has impacted costs, would be felt in subsequent months. The rising rate in subsequent months would be driven majorly by road and air transport costs; food, and related items, among others.