Current Inflation Trend in Nigeria: An Overview

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June 19, 2024/Futureview Research


As of May 2024, the inflation rate jumped to 33.95%, up from 33.69% in April 2024. That’s a 0.26% increase in just one month. Over the past year, inflation has climbed by 11.54% from 22.41% in May 2023. The major driver has been the consistent increase in food prices. Let’s break it down for you and explain its implications on your economic life.

What’s the Big Deal About Inflation?

Inflation is all about how the prices of things we buy (like foodstuff, petrol, drinks, et cetera) go up over time. It’s super important because it affects how much we can buy with our money, our purchasing power. Too much inflation? Things get expensive fast. Too little? The economy can slow down. Our goal here is to understand what’s driving these price changes and what we might expect in the future.

Current Situation: What’s the Latest?

In May 2024, Nigeria’s inflation rate jumped to 33.95%. This is a slight increase from 33.69% in April 2024. Over the past year, inflation has gone up significantly, from 22.41% in May 2023 to this latest report of 33.95% in May 2024.

Despite efforts by the Central Bank of Nigeria (CBN) to curb inflation by raising the Monetary Policy Rate (now at 26.25%), inflation continues to rise. This shows the complex nature of inflation and its resistance to policy measures.

This rapid increase shows how quickly the cost of living is rising. Here’s a graph to visualize this change:

Source: NBS, Futureview Research

What’s Happening with Food?

Food prices have been the worst hit by inflation. The food inflation rate is now at 40.66% year-on-year, which is a huge increase from 24.82% in May 2023. Here’s a breakdown of what’s going up:

• Bread and Cereals: Semovita, Oatflake, Yam flour, Garri, Beans.

• Potatoes, Yam, and other Tubers: Irish Potatoes, Yam, Water Yam.

• Oil and Fat: Palm Oil, Vegetable Oil.

• Fish: Stockfish, Mudfish, Crayfish.

• Meat: Beef Head, Chicken (live), Pork Head, Bush Meat.

This shows that the prices of these everyday food items have risen dramatically.

Understanding the Factors driving Inflation Up

Several factors are driving this inflation, some of which include:

·       Insecurity and Supply Chain Issues: Insecurity and supply chain issues have further exacerbated the inflationary pressures in Nigeria. Ongoing security challenges disrupt the movement of goods, increasing transportation costs and causing delays. These disruptions, along with supply chain issues, result in shortages and higher prices for essential goods, adding to the already rising costs of goods and services in the economy.  

·       Devaluation of the Naira: The devaluation of the naira in the FX market is a major driver of inflation, as it increases import costs that ripple through the economy, affecting production costs and supply chain dynamics. This has led to higher prices for machinery, fertilizers, and other inputs for farmers. Additionally, the manufacturing sector faces rising expenses for raw materials, leading to higher production costs.

·       Increased Energy Cost: The recent removal of the fuel subsidy, along with higher global crude oil prices and the depreciation of the naira, has significantly impacted domestic prices for food, energy, and transportation. The transportation industry, in particular, has seen a rise in fuel prices, leading to higher fares for commuters.

Global crude oil prices have surged by 16%, reaching as high as $85 per barrel, driven by supply cuts from major oil-producing countries. Concurrently, the naira has depreciated to as low as N1500 per dollar. This combination has compounded the impact on fuel prices and is likely to result in a further increase in the pump price of petrol as the landing cost of petrol rises due to adjusted import duties.

Here are the steps you can take to navigate these challenging times and protect your investments against inflation:

·       It’s important to recognize that not all investments are adversely affected by inflation. In fact, with thorough research, you’ll discover that certain investments can perform well even in times of inflation.

·       Invest in assets that typically rise with inflation and are not easily replaceable, such as gold, land, and properties. These assets tend to appreciate over time and offer effective protection against inflation.

·       Review your investment allocation and diversify your portfolio. Ensure your current investments are resilient against inflation and consider diversifying if you haven’t already done so. A well-diversified portfolio is your safest approach.

·       Stay invested in stable currencies and growth stocks. While it may not seem like the optimal decision in the short term, over the long run, it can prove to be a wise choice. For example, the Banking stocks are a good investment option (currently in low levels) during these time with consistent surge in MPR, this translates to increased interest rate for the banks and a sustained dividend payout to shareholders.

·       Consider investing in high-yield bonds (also known as junk bonds) or corporate bonds with adjustable interest rates (floating-rate bonds). These bonds typically offer higher yields to compensate for inflation risk.


Nigeria is facing significant inflationary pressure, especially with food prices. Despite the CBN’s efforts to curtail inflation by increasing the Monetary Policy Rate, inflation continues to rise. Understanding these trends helps us prepare and adapt in the face of ever-changing macroeconomic factors.

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