August 11, 2023.
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Inflation rate, the average rate of change in the prices of goods and services is expected to continue its upward tick in July, rising to 23.35 per cent, the highest in 18 years,” Chief Executive Officer of Financial Derivatives Company (FDC) Limited, Bismarck Rewane, has said.
“Headline inflation in Nigeria is projected to increase again by 0.56 per cent to 23.35% per cent in July. This will be the seventh consecutive monthly increase and the highest inflation rate in 18 years. Apart from the sustained uptick in the general price level, the rate of change in inflation is increasing as the impact of recent policy changes becomes more evident,” he said.
“In a period of one month, the price of PMS has increased twice, first to N488/ltr and then to N617/ltr. Diesel price is also up 5.88 per cent to N720/ltr, pushing up logistics costs. In addition, the naira touched an all-time low of N893/$ at the parallel market.
He said higher logistics costs and currency depreciation could limit the harvest season effect.
“Food prices are typically affected by seasonality, rising during the planting season and reducing during harvest due to increased supply. However, the surge in logistics costs, naira depreciation, and the customs duty exchange rate adjustment could keep commodity prices elevated despite the commencement of the harvest season.
“The new administration made policy pronouncements in the belief that policy statements lead to instant economic outcomes. However, in reality, all economists know that there are lags, which are usually underestimated by politicians,” he said.
Nigeria’s economy is already plagued by record-high inflation (22.8 per cent as of June 2023), sluggish growth (2.31 per cent in Q1’23), bloated debt (N49.9 trillion in the first quarter of 2023), and a currency crisis (N890/$).
“Two petrol price increases in one month were more than the public could bear. The corporates are also counting their losses, with five companies posting over N700 billion in exchange rate translation losses. However, these losses are one-offs; after this difficult patch, there is a silver lining. With a populace that is fatigued and reeling from adverse economic conditions, the policy changes could easily become a recipe for chaos,” he said.(www.naija247news.com)
