As Africa's largest economy struggles with increasing costs in front of a central bank interest rate decision later this month, official data released on Friday revealed that Nigeria's annual inflation rate advanced to an 18-year high of 25.8% in August.
President Bola Tinubu scrapped exchange restrictions and eliminated a popular but expensive decades-old gasoline subsidy in May. This enraged unions, who have threatened strikes, and caused prices for everything from food to transportation to soar.
According to the the country’s National Bureau of Statistics (NBS), the inflation rate increased for an eighth consecutive month from July's 24.08%, aggravating a cost of living issue made worse by Tinubu's policies. These figures highlight the fact that the last time Nigerians saw this amount of inflation was over a decade ago, in August 2005.
"Nigerian inflation rose faster than expected in August, a month that more typically sees seasonally subdued inflation pressures," said Razia Khan, Standard Chartered managing director and chief economist, Africa and Middle East.
As seen on the American news platform, Reuters, some economic analysts, some of the main causes of Nigeria's inflation include the devaluation of the naira, rising gasoline and food prices, logistical expenses, and an expansion of the money supply.
"The inflation data in our view reflects only in part the lifting of the subsidy. Much of the pre-existing pressure came from Nigeria's monetary policy stance in the months that preceded this outcome, and the continued naira depreciation on the parallel market," Khan said.
The Reuters report also revealed that the Central Bank of Nigeria raised rates by a smaller-than-expected 25 basis points in July, contrary to analysts' expectations. It is due to set rates again on Sept. 26 and some analysts expect a more hawkish stance.
According to the NBS, food inflation, which makes up the majority of Nigeria's inflation basket, increased to 29.34% in August from 26.98% in July as the cost of essentials increased.