Despite a surge in the naira’s value in the FOREX market in the last month, inflation maintained its upward trend.

Producers and importers hinged the astronomical rise in the prices of goods on the devaluation of the naira, which at a stage was exchanged at the rate of ₦1,900 to the United States dollar. In the last two weeks, the naira has regained a lot of its lost value, currently exchanging at the rate of ₦1,201 to the dollar.

ALSO READ: What is something new to blame for the January 29.90% inflation?

Yet, prices of goods remain high; in some cases, continuing to rise.

National Bureau of Statistics’ March Consumer Price Index (CPI) put the inflation figure at 33.20 percent, higher than the preceding month’s 31.70 percent, breaking a 28-year record. Stated the data agency: In March 2024, the headline inflation rate increased to 33.20% relative to the February 2024 headline inflation rate which was 31.70%. Looking at the movement, the March 2024 headline inflation rate showed an increase of 1.50% points when compared to the February 2024 headline inflation rate.

On a year-on-year basis, the headline inflation rate was 11.16% points higher compared to the rate recorded in March 2023, which was 22.04%. This shows that the headline inflation rate (year-on-year basis) increased in the month of March 2024 when compared to the same month in the preceding year (i.e., March 2023).

Although inflation hit an all-time high, the spike was not as rapid as was the case in February.

On a month-on-month basis, the headline inflation rate in March 2024 was 3.02%, which was 0.10% lower than the rate recorded in February 2024 (3.12%). This means that in the month of March 2024, the rate of increase in the average price level is less than the rate of increase in the average price level in February 2024.

Sifting through the data released by the National Bureau of Statistics, the rise in the price of foods is the biggest contributor to the galloping inflation. At 40.01 percent, the food inflation stood stark as the biggest driver of inflation. The food inflation rate in March 2024 was 40.01% on a year-on-year basis, which was 15.56% points higher compared to the rate recorded in March 2023 (24.45%). The rise in food inflation on a year-on-year basis was caused by increases in prices of the following items: garri, millet, akpu uncooked fermented (which are under the bread and cereals class), yam tuber, water yam, among many other foods.

Analysts have attributed the higher-than-usual cost of food to insecurity and costlier haulage. Many farmers are unable to go to their farms because of terrorist activities in many parts of the north, and in the past few months, the cost of diesel, which is the fuel many of the trucks depend on to transport foods from farms to markets, has also seen the pump price rise steeply.

ALSO READ: President Tinubu admits he has no magic wand yet inflation would come down

With this double whammy, several analysts do not see any end in sight to inflation, even if the naira returns to ₦700 to the dollar before the double devaluation of the currency by the current administration.

Until insecurity and the high cost of fuel, which are the main drivers of food inflation challenges are addressed, experts believe the naira regaining value would have no benefit to the generality of Nigerians.

Adewole Ojo

Adewole Ojo is the Editor-in-Chief of Meiza Nigeria. He can be reached on adewole.ojo@fourpoints.ng.