{"id":128476,"date":"2024-08-20T23:32:05","date_gmt":"2024-08-20T22:32:05","guid":{"rendered":"https:\/\/www.africa-press.net\/nigeria\/uncategorized\/why-nigerias-declining-inflation-rate-fails-to-reflect-market-realities-experts"},"modified":"2024-08-21T00:37:53","modified_gmt":"2024-08-20T23:37:53","slug":"why-nigerias-declining-inflation-rate-fails-to-reflect-market-realities-experts","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/nigeria\/all-news\/why-nigerias-declining-inflation-rate-fails-to-reflect-market-realities-experts","title":{"rendered":"Why Nigeria\u2019s declining inflation rate fails to reflect market realities \u2013 Experts"},"content":{"rendered":"<p><b>By Ogaga Ariemu<\/b><\/p>\n<p><span style=\"color: #ff6600\"><strong>Africa-Press &#8211; Nigeria. <\/strong><\/span>Nigeria\u2019s latest inflation report which recorded a decline in July 2024 is generating mixed reactions.<\/p>\n<p>This is as Nigerians have decried that the figure does not reflect everyday market realities.<\/p>\n<p>Recall that on Thursday last week, the National Bureau of Statistics consumers price Index and Inflation data for July indicated that the country\u2019s headline and food inflation declined to 33.40 percent and 39.53 percent from 34.14 percent and 40.87 percent, respectively, in June 2024.<\/p>\n<p>This represents a 0.79 percent decline in core inflation compared to the 34.19 percent recorded in June 2024. Like core inflation, Nigeria\u2019s food inflation dropped on a month-on-month basis to 2.47 percent in July from 2.55 percent.<\/p>\n<p>The development sent a shockwave in the economy because this is the first time Nigeria\u2019s inflation has recorded a decline since December 2022 when it stood at 21.34 percent.<\/p>\n<p>The development comes after a series of monetary and fiscal interventions by the government.<\/p>\n<p>Recall that the Central Bank Nigeria in its latest Monetary Policy Committee meeting further raised the interest rate to 26.75 percent to tackle inflation.<\/p>\n<p>Similarly, the government recently began the commencement of zero import duty waiver for staple foods such as husked brown rice, grain, sorghum, millet, maize, wheat and beans as measures to tackle rising food prices.<\/p>\n<p>Meanwhile, according to a market survey, a 50-kilogram bag of rice (local rice) stood between N78,000 to N85,000, a mudu of beans (white and red), N2,800 and N3,400, garri between N1300 to N1600, Dustin Basket Tomatoes and Pepper, N6000 and N9000, 1kg of frozen chicken, N4,500, Indomie super pack, N12,500, 1 liter red and groundnut oil N1200 and N1800, five big tubers of yam, N10,000 to N16,000.<\/p>\n<p>\u201cApart from yam prices that came down because this is harvest season, every other food item continued to witness price increase\u201d, a trader in Dutse Market, Mrs. Caroline Usman said.<\/p>\n<p>Reacting to the latest inflation figure, financial experts have explained why there is a disconnect between the National Bureau of Statistics\u2019 inflation data and market realities.<\/p>\n<p>They made this known in different interviews on Monday.<\/p>\n<p>Speaking exclusively on Monday, the Executive Director of the Centre for the Promotion of Private Enterprise, Muda Yusuf clarified that a decrease in inflation doesn\u2019t imply a price reduction, rather it means a decrease in the rate of increase.<\/p>\n<p>According to him, the Nigerian government must deal decisively with the instability in the foreign exchange market, energy cost, trade cost and insecurity to bring down inflation.<\/p>\n<p>\u201cFirst, we need to be clear about the concept of inflation. A decrease in inflation doesn\u2019t imply a price reduction but rather a decrease in the rate of increase.<\/p>\n<p>\u201cFor instance, if there is a price increase of N10 in July on a particular product and in June, it is N5, that is a decrease in Inflation.<\/p>\n<p>\u201cInflation is about measuring the rate of price increase. You talk about price reduction when referring to deflation.<\/p>\n<p>\u201cThere is this general misconception among many people that once they hear that there is a decline in inflation, they feel that what the report says is that the price of goods and services has reduced.<\/p>\n<p>\u201cIt is the nature of prices to come up while some come down. Inflation is about the general price level.<\/p>\n<p>\u201cThere is a big array of products in the inflation basket. Of course, the one that has the most weight is food inflation. To reduce the inflationary pressures we need to examine the key drivers.<\/p>\n<p>\u201cThe three major drivers are the exchange rate situation; if we can strengthen the exchange rate, and energy cost, which has driven the cost of production, operation and logistics, prices will come down.<\/p>\n<p>\u201cFrom the cost-push perspective, energy cost is very important. If we bring down the cost of energy, moderation is possible. We can achieve this if you reduce import dependence on fuel.<\/p>\n<p>\u201cIf we can refine it domestically, if the government sells crude to Dangote Refinery and other refineries in Naira, costs will be the driver of inflation.<\/p>\n<p>\u201cLastly, insecurity; the food crisis has been largely attributed to food insecurity\u201d, he told DAILY POST.<\/p>\n<p>On his part, a financial analyst and the Chief Executive Officer of SD &amp; D Capital Management, Gbolade Idakolo said despite the decline in inflation, Nigeria\u2019s economic environment was still very tense.<\/p>\n<p>He noted that the government should come up with policies that impact the ordinary citizen directly resulting in a reduction in cost-of-living.<\/p>\n<p>\u201cThe NBS data showing core and food inflation reducing in July 2024 is partly due to aggressive policies of the government that are gradually taking shape.<\/p>\n<p>\u201cHowever, seasonal factors affected a decline in food inflation which saw the prices of major food items and perishable crops reduced, e.g tomatoes, Irish potatoes, etc.<\/p>\n<p>\u201cThe CBN tightening of monetary measures is seriously hurting businesses and causing manufacturers and SMEs to groan under high interest rates from banks.<\/p>\n<p>\u201cThe import waiver on some selected food items as approved will take effect in August 2024 and it\u2019s left to be seen how far it will go to reduce the cost of food items.<\/p>\n<p>\u201cThe fiscal and monetary policies of the Federal government have not attacked the high cost of living, with fuel prices rising amid scarcity and prices of goods and services on the high side.<\/p>\n<p>\u201cThe government needs to listen to Nigerians to facilitate policies that will be directly impactful to ordinary Nigerians.<\/p>\n<p>\u201cThe economic environment is still very tense and measures should be put in place to make government policies bearable for the people\u201d, he told DAILY POST.<\/p>\n<p>Also, Prof Godwin Oyedokun, a don at Lead City University in Ibadan said the disconnect between NBS data and everyday consumer experiences underscored the complexities of accurate economic data interpretation.<\/p>\n<p>\u201cThe recent NBS data indicating a month-on-month decline in both core and food inflation in Nigeria, while seemingly positive, conflicts starkly with the everyday experiences of consumers.<\/p>\n<p>\u201cThis disconnect underscores the complexities of accurately measuring and interpreting economic indicators, particularly in a context marked by significant price volatility.<\/p>\n<p>\u201cWay Forward: To effectively address the rising cost of living and combat inflation, the government should consider the following: Improving Data Collection: Enhance the NBS\u2019s methodology to better reflect the price changes experienced by consumers.<\/p>\n<p>\u201cTargeted Interventions: Implement policies that directly address supply-side constraints in key sectors, such as agriculture and manufacturing.<\/p>\n<p>\u201cSocial Safety Nets: Provide targeted support to vulnerable populations affected by rising prices.<\/p>\n<p>\u201cExchange Rate Management: Stabilize the exchange rate to reduce imported inflation.<\/p>\n<p>\u201cStructural Reforms: Implement long-term reforms to improve the business environment, reduce corruption, enhance productivity and adopt a multi-faceted approach that combines monetary policy, fiscal measures, and structural reforms.<\/p>\n<p>\u201cThe government can effectively address the challenges posed by inflation and improve the living standards of Nigerians\u201d, he stated.<\/p>\n<p>On his part, Okechukwu Unegbu, a former president of the Chartered Institute of Bankers of Nigeria, CIBN, said contrary to NBS\u2019s data, Nigeria\u2019s core and food inflation is above 36 percent and 40 percent, respectively.<\/p>\n<p>\u201cWe keep our inflation records, which is different from what NBS reports. The NBS data doesn\u2019t tally with the reality of prices in the market.<\/p>\n<p>\u201cThe core inflation is about 36 percent, while that of food is over 40 percent.<\/p>\n<p>\u201cI don\u2019t think the NBS data reflects reality. The current monetary and fiscal measures will not solve the problem except if there is massive production in the country and security is tackled\u201d, he said.<\/p>\n<p><b>Source: Daily Post Nigeria<\/b><\/p>\n<p><strong>For More News And Analysis About Nigeria Follow Africa-Press<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>By Ogaga Ariemu Africa-Press &#8211; Nigeria. Nigeria\u2019s latest inflation report which recorded a decline in July 2024 is generating mixed reactions. This is as Nigerians have decried that the figure does not reflect everyday market realities. Recall that on Thursday last week, the National Bureau of Statistics consumers price Index and Inflation data for July [&hellip;]<\/p>\n","protected":false},"author":84,"featured_media":128475,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[24,1437,29,28,2660],"tags":[365,254],"class_list":["post-128476","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-files","category-head-lines","category-homepage-english","category-to-homepage","tag-inflation","tag-nigeria"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.1 (Yoast SEO v27.0) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Why Nigeria\u2019s declining inflation rate fails to reflect market realities \u2013 Experts - Nigeria<\/title>\n<meta name=\"description\" content=\"Nigeria\u2019s latest inflation report which recorded a decline in July 2024 is generating mixed reactions. 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