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NBS says Fuel Subsidy impact on Inflation in June minimal, expects further effects

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By Oludare Mayowa

The National Bureau of Statistics (NBS) in Nigeria has indicated that the latest headline inflation figure may not fully reflect the impact of President Bola Tinubu’s administration’s recent removal of fuel subsidies.

The NBS, in a Twitter post, explained that the data collection for the month of June was conducted until the middle of the month, and thus may not have fully captured the policy’s effect on the consumer price index.

According to the NBS, the full impact of the fuel subsidy removal and exchange rate unification is expected to manifest more noticeably in the inflation rate in the coming months.

The bureau clarified that since data collection for computing the rate is typically concluded around the middle of the reference month, the June figures only reflect approximately two weeks of the policy’s influence on consumer prices.

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Consequently, the complete impact on prices is likely to be reflected not only in June but also in subsequent months based on actual prices collected across the country.

The NBS recently reported an increase in the headline inflation rate for June, reaching 22.79 percent compared to the previous month’s rate of 22.41 percent. On a year-on-year basis, June 2023’s headline inflation rate was 4.19 percent higher than the same period in 2022, which recorded a rate of 18.60 percent.

Economic experts attribute the rise in inflation to a combination of escalating food and energy costs, along with currency depreciation. However, it is important to note that the reported inflation figure for June is lower than the projections made by several analysts, who anticipated a rate of 24 percent for the month.

Despite the challenging inflationary environment, analysts maintain optimism regarding the Nigerian government’s ongoing fiscal and monetary reforms. These measures are expected to gradually alleviate the cost of living in the foreseeable future, with the economy poised to gain solid momentum in the medium to long term.

(omayowa@globalfinancialdigest.com; Newsroom: +234 8033 964 138)

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