Nigeria: Inflation falls to lowest level since February in August
Latest reading: Inflation came in at 32.2% in August, down from July’s 33.4%. August’s result represented the lowest inflation rate since February and the second consecutive month of moderation. The slowdown was largely due to a slower rise in prices for food. Moreover, prices pressures for housing and utilities softened.
The trend pointed up, with annual average inflation coming in at 31.3% in August (July: 30.8%). Meanwhile, core inflation ticked up to 26.4% in August from July’s 26.3%.
Finally, consumer prices rose 2.22% in August over the previous month, below July’s 2.28% increase. August’s result marked the weakest reading since May.
Outlook: Our Consensus is for inflation to continue falling at a slow clip in the coming months on the back of past monetary policy tightening and a high base effect. That said, a marked increase in petrol prices in September due to the removal of fuel subsidies poses a significant upside risk.
Panelist insight: Analysts at the EIU commented on the outlook:
“The increase in pump prices will have a meaningful effect on headline inflation, which had only just begun to decline after 18 straight months of increase. […] We now expect a temporary reversal in the disinflation trend, followed by a slower decline in 2025.”