In the first six months of 2023, several economic policies, amid an election and change in administration, have had an impact on the country’s inflation rate which has increased consecutively.

Nigeria’s Consumer Price Index (CPI) which measures the average change over time in the prices of goods and services consumed by people for day-to-day living was reported by the National Bureau of Statistics (NBS) to have increased to 22.79 per cent in June 2023

NBS said that the headline inflation rate was 0.38 per cent higher than the 22.41 per cent recorded in May 2023.

On a year-on-year basis, the Headline inflation rate was 4.19% points higher compared to the rate recorded in June 2022, which was 18.60%. This shows that the Headline inflation rate (year-on-year basis) increased in June 2023 when compared to the same month in the preceding year (June 2022),” NBS said.

Food & Non-Alcoholic Beverages (11.81 per cent), Housing Water, Electricity. Gas & Other Fuel (3.81 per cent), Clothing & Footwear (1.74 per cent) and Transport (1.48 per cent) had the highest contribution to the inflation rate recorded in June.

However, while this is not the highest, or the first consecutive increase in this year, RipplesMetrics findings reveal that several economic policies initiated by former President Muhammadu Buhari and President Bola Tinubu might have contributed to this consistent rise.

Inflation from January to June

At the beginning of the year, the federal government had just implemented the policy to phase out the old naira note to be replaced by newly redesigned N200, N500 and N1000 naira notes

Ripples Nigeria documented how the policy affected the lives of students with the chief economist, KPMG Nigeria, Oyeyemi Kale, estimating that the Nigerian GDP which stood at N198 trillion in 2022 will lose about N10 trillion to N15 trillion as a result of the Naira scarcity.

At that time, Nigeria’s inflation rate which was 21.34 per cent in December 2022 increased by 0.48 per cent to 21.82 per cent in January 2023 and 22.91 per cent in February 2023.

Recall that the International Monetary Fund queried the procedure used by the NBS to collate the monthly inflation rate saying that NBS was still using a basket index from the 2003/2004 National Consumer Expenditure Survey

Despite the suspension of the policy, Nigeria’s inflation rate still continues to increase. At the end of February and the beginning of March, Nigeria held its general election that brought in Bola Ahamed Tinubu (now president) of the All Progressive Party as the winner securing 8,805,420 votes over his other 17 contenders

As the consumer market anticipated the economic policies of the then-elected president, the inflation rate continued rising, although steadily, to 22.04 per cent in March, 22.22 in April and 22.41 per cent in May 2023

However, when President Tinubu assumed power on May 29, he instantly announced the removal of the fuel subsidy. This announcement increased fuel pump price by over 100 per cent which in turn affected the prices of foodstuffs.

The World Bank projected that Nigeria’s inflation rate would reach 25 per cent this year due to the removal of fuel subsidy. Recent inflation figures show that as of June 2023, the inflation rate has risen to 22.79 per cent.

June Inflation rate

NBS said that on a year-on-year basis, the Urban inflation rate in June 2023 was 24.33 per cent, which was 5.23 per cent points higher compared to the 19.09 per cent recorded in June 2022. On a month-on-month basis, the Urban inflation rate was 0.21 per cent points higher compared to May 2023 (2.09 per cent).

Also, the Rural inflation rate in June 2023 was 21.37 per cent on a year-on-year basis; this was 3.25 per cent points higher compared to the 18.13 per cent recorded in June 2022. On a month-on-month basis, the Rural inflation rate in June 2023 was 1.96 per cent, up by 0.16 per cent points compared to May 2023 (1.80 per cent).

Food inflation

In June, the Food inflation rate rose to 25.25 per cent on a year-on-year basis; this was 4.65 per cent points higher relative to the rate recorded in June 2022 (20.60 per cent).

The rise in Food inflation on a year-on-year basis was caused by increases in prices of Oil and fat, Bread and cereals, Fish, Potatoes, Yam and other tubers, Fruits, Meat, Vegetable, Milk, Cheese, and Eggs

The food inflation rose from 24.32 per cent in January to 24.35 per cent in February, 24.45 per cent in March, 24.61 per cent in April and 24.82 per cent in May.

However, the NBS has come out to say that the June inflation rate numbers may not fully capture the impact of the fuel subsidy removal and the unification of the exchange rate.

According to them, “This is because the data collection for computing the rate for the reference month typically stops around the middle of the month, meaning that the June numbers only reflect approximately two weeks of the policy impact on consumer prices. The full effect of the policy, as relates to prices, can, therefore, not be reflected in June only, but also in subsequent months, based on actual prices collected in market outlets across the country