Despite the slight slowdown in the nation's inflation rate for the month of May this year, it remains at a high level, as analyst at Comercio Partner, a Lagos based investment bank has said that Nigerians should not expect significant relief from high prices in the immediate future.
In reaction to the inflation data released by the National Bureau of Statistics, NBS, last week, the company stated that: "Headline inflation has simmered down a bit, showing a slight overall rise. But don't get too comfortable--core inflation and food inflation, the main culprits, have nudged up. This mixed bag suggests that while the general inflation rate is catching a breather, essential goods and services are still feeling the heat."
The noted that the May's Headline CPI Year on Year, (YoY) was 33.95%, up from 33.69% in April. Month-on-month, the headline inflation rate for May 2024 decreased slightly to 2.14%, down 0.15% from April's 2.29%.
"Food inflation, a major driver, rose to 40.66% in May, slightly up from 40.53% in April. Year-on-year, it surged by 15.84% from 24.82% in May 2023. This increase was driven by higher prices for millet flour, Garri, beans, wheat flour (prepacked), Semovita, and other food items.
"Month-on-month, headline inflation hints at a cool-down. Yet, the stubbornly high core and food inflation levels reveal a slow and uneven chill across different sectors."
Commenting on the impact, the Comercio Partners, said: "High inflation, particularly in food prices, has eroded purchasing power, negatively impacting consumer spending - a critical driver of economic growth. Persistent core inflation suggests underlying cost pressures remain, influencing business costs and investment decisions.
"Several companies, including Huggies, Microsoft, and Meta, have shut down operations due to the harsh macroeconomic environment. These closures highlight the unfavourable conditions for business operations, likely leading to increased unemployment and reduced consumer spending power."
Sign up for free AllAfrica Newsletters
Get the latest in African news delivered straight to your inbox
They further added: "While inflation shows signs of a slight slowdown, it remains at a high level. Significant relief from high prices is unlikely in the immediate future for Nigerians.
In a bid to counter soaring inflation, the Central Bank's decision to elevate the benchmark interest rate to a historic 24.75% underscores its commitment to inflation containment. However, this comes at a cost as an aggressive hawkish is detouring growth."
