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• According to the latest Consumer Price Index (CPI) report from the National Bureau of Statistics (NBS), Nigeria’s headline inflation rate decelerated for the first time in nineteen months to 33.40% YoY in July 2024. This marks an 80bps moderation in consumer prices, primarily driven by the impact of a high base and the slowdown recorded in the food basket. The indices comprising the headline numbers showed mixed movements in July.
  

• According to the NBS report, food inflation decelerated both on an annual and monthly basis despite legacy issues in the agricultural sector. This moderation remains largely hinged on the impact of a high base, as the sector still grapples with challenges like insecurity in food producing regions, inadequate infrastructure, bad road networks and poor storage facilities. The annual food inflation rate slowed for the first time in nineteen months to 39.53% YoY, retreating from an all-time high of 40.87% in the prior month, but remains materially higher than 26.98% recorded in the corresponding period of the previous year.
  

• Elsewhere, core inflation continued its northward trajectory, rising by 27.47% YoY in July 2024, up from 27.40% in the prior month. Similarly, on a monthly basis, the core index inched up by 10bps 2.16%. This was driven by price increases in Alcoholic Beverage, Tobacco, and Kola (+68bps to 2.61% MoM), Health (+45bps to 1.87% MoM), Clothing and Footwear  (+43bps to 1.81% MoM), Furnishings & Household Equipment Maintenance (+36bps to 1.82% MoM), Transport  (+7bps to 2.47% MoM), and Communication (+2bps to 0.11% MoM).
  

• Looking ahead, we anticipate further decline in inflationary pressures as general price levels move at a slower pace. This premise is based on the high base effect which primarily stoked the slowdown seen in the period under review. We highlight that the recent suspension of tariffs and duties on selected food imports should reduce the pressure on food inflation. We also expect the tight financial conditions amidst the high-interest rate environment to contribute to the envisaged moderation in headline inflation. In addition, we opine that the onset of the harvest season also supports our outlook for inflation to continue its decline in subsequent months.