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Nigeria’s imported food inflation jumps to 29.8% as naira depreciation triggers record high rate

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Imported food inflation in Nigeria rose to its highest level, reaching 29.8% in February 2024 from 26.3% recorded in the previous month, which represents a 352 basis points increase.

This is according to analysis by Nairalytics, the research arm of ThePressNG.

Further analysis showed that imported inflation has increased consecutively for over 4 years, largely driven by both internal and external factors.

The external factors include global supply chain shocks following the Covid-19 pandemic and Russia-Ukraine war, surge in global oil prices amongst others, while the domestic front is largely due to FX scarcity and subsequent depreciation of the local currency.

According to Nairalytics, Naira depreciated by 37.7% and 17.3% in the month of January at the official and parallel market to close at N1,456/$ and N1,470/$ respectively. Year-to-date, the naira has depreciated by 43.4% and 24.7%, closed last at N1,602.75/$ and N1,614/$ respectively.

Consequently, the headline inflation rate rose to an almost 28-year high of 31.7% in the review period, driven by both the core and food component of the index.

Food inflation rose by 251 basis points to 37.92% while core inflation (all items less farm produce and energy) increased by 154 basis points to 25.13%.

According to the NBS, food and non-alcoholic beverages contributed 16.42% to the headline inflation, mostly driven by increase in the prices of read and cereals, yam and tubers, fish, oil and fat, meat, fruit, coffee amongst others.

In the same vein, the increase in the core component was driven by surge in road transport cost, accommodation, medical services, as well as pharmaceutical products.

The surge in Nigeria’s inflationary pressure is despite several policies implemented by the CBN to tame the rising rate of inflation and manage FX volatility.

Before February, the CBN had increased the benchmark interest rate (MPR) by over 700 basis points between April 2022 and January 2024, in a bid to tackle money supply, which was unabated. A move which had no significant positive impact on inflationary pressure.

The CBN is set to hold its second MPC meeting for the year next week, where the Committee will be deliberating a hold or a hike stance following the 400 basis points increase in the previous week.

The CBN’s body language has indicated an aggressive contractionary policy direction towards improving the differential between interest rate and inflation, which is currently at a deficit of 8.95%.

Meanwhile, it is expected that the CBN may either hike rates albeit at a slower rate or give time for previous rate hikes to have its effect.

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