Inflation battles economic gains in Q3 as Naira dips
Sopuruchi Onwuka
Inflation neutralizes key economic gains of the new Tinubu administration of the federal government following the key blunders of Naira devaluation and withdrawal of fuel subsidy which marked entry of President Tinubu’s government.
According to statistics which compared figures from the National Bureau of Statistics and other global indices, economic gains earned from stronger performance in the agriculture and services sectors were totally wiped off by inflationary trends stoked by fuel subsidy removal and rapid devaluation of the local currency.
According to Focus Economics, an international analytics journal, Nigeria’s Inflation accelerated at 25.8 percent in August, up from July’s 24.1 percent., stemming from a weak Naira and the removal of fuel subsidies in May.
The August inflation level marked the highest inflation rate since August 2005, with greater price pressures recorded for food, transportation, and housing and energy.
The trend pointed up, with annual average inflation coming in at 22.4 percent in August against 21.9 percent in July; and core inflation rising to 21.1 percent in August from 20.5 percent in July.
Consumer prices also increased by 3.18 percent in August, accelerating from 2.89 percent in July, marking the highest reading since January 2012.
The medium stated that weak Naira and high energy cost would continue driving up inflation during the remainder of the year, stressing that monetary policy and fuel prices are key factors to watch in Nigeria’s economic progress for the rest of the year.
Then firm declared that agricultural and services sectors propelled annual economic growth in the second quarter of the year, while the industrial and oil sectors shrank at a sharper rate.
Available data points to resilient growth in the third quarter of the year when credit growth picked up steam in July, and oil production grew at a sharper annual rate till August. But inflation arising from President Tinubu’s reforms in June sharply rose to wipe off the gains with plummeting naira and higher petrol prices.
According to the country’s purchasing managers index figures, soaring price pressures weighed on private sector conditions throughout the third quarter even as the Nigerian National Petroleum Company (NNPC) Limited secured a $3.0 billion crude oil repayment from Afreximbank in August to help stabilize the Naira and arrest rising fuel cost.
In a separate evaluation, analysts at the Economic Intelligence Unit (EIU) stated that Nigeria’s inflationary jumps would not abate but would, instead, enter a more intense phase as the impact of Naira devaluation and petrol subsidy removal work through the system go deliver debilitating effects.
