Business Nigeria: Inflation Rate Drops, Will Commodity Prices Follow Suit?



The National Bureau of Statistics, NBS, on Tuesday released data which indicated that the nation's inflation rate has dropped- the first time it will be happening in 15 months.

Nigeria's inflation rate, which has been on a steady increase for the better part of a year, dropped from 18.72 per cent in January to 17.78 per cent in February.

According to the NBS, the drop was as a result of the slow increase recorded in food prices and other divisions.

However, it could ignite a glint of hope that things are about to get better. Nigeria's economy has been battered by the drop in oil price and the attacks on oil installations in the Niger Delta had cut down oil production to historical lows. These, in turn pressurized the naira, and the currency has lost more than 200% at the parallel market.

Things at the moment are not as worse as they have been in the past couple of months, although the difference is barely discernible. The naira has rallied of late and seems to be appreciating, due to the CBN's aggressive assault on the black market. The apex bank has flooded the market with the greenback, releasing over $1bn in the last few weeks.

Although many don't think the CBN's attack will see the naira appreciate back to 167 per dollar, many analysts agree that it has solved one major problem- the supply of foreign exchange, which was the major reason for the steady devaluation of the naira.

A stronger naira translates to less production cost for firms, which will make the prices of commodities fall eventually.

With an appreciating naira and an improving inflation rate, is Nigeria on its way out of recession? Will the price of commodity start falling?

Only time will tell.


  • Osinbajo-and-buhari-e1479490817767.jpg
    26.5 KB · Views: 2