Nigerian inflation soars by a further 1.8% during the month of February to a high of 31.7%

NIGERIA'S  inflation rate rose to 31.7% during the course of February this year from the 29.9% that was recorded during the month of January according to recent statistics just published by the National Bureau of Statistics (NBS).

In its latest Consumer Price Index (CPI) report, the NBS revealed that there was a 1.8% monthly increase in headline inflation. This indicates that in February 2024, the rate of increase in the average price level was more than the rate of increase in the average price level in January 2024.

Comparatively, on an annual basis, February 2024’s inflation rate was 9.79% higher than the 21.91% recorded in February 2023. Also, the month-on-month headline inflation rate in February 2024 reached 3.12%, representing an increase of 0.48% from January 2024’s rate of 2.64%.

This indicates that the pace at which average prices rose in February 2024 exceeded the rate of price increase in January 2024. This latest inflationary surge is despite tightened monetary policy by the Central Bank of Nigeria (CBN).

The NBS report read: “Looking at the movement, the February 2024 headline inflation rate showed an increase of 1.80% points when compared with the January 2024 headline inflation rate.  On a year-on-year basis, the headline inflation rate was 9.79% points higher compared with the rate recorded in February 2023, which was 21.91%.

"This shows that the headline inflation rate year-on-year basis increased in the month of February 2024 when compared to the same month in the preceding year. Furthermore, on a month-on-month basis, the headline inflation rate in February 2024 was 3.12%, which was 0.48% higher than the rate recorded in January 2024, which was 2.64%."

At its latest monetary policy meeting, the CBN increased the benchmark interest rate by 400 basis points to a record 22.75%. Justifying reasons for the hike, CBN governor Olayemi Cardoso, explained that members considered various scenarios including whether to hold or hike policy and concluded that inflation could become more persistent in the medium term and pose more regulatory issues if not well-anchored.

Thus, members voted for a significantly high policy rate hike to drive down the inflation rate substantially. He mentioned that the meeting extensively discussed various distortions in the foreign exchange market, particularly the impact of speculators exerting upward pressure on the exchange rate, leading to a significant pass-through effect on inflation.