Despite a slight slowdown in the nation’s inflation rate for May, it remains high. Analysts at Comercio Partners, a Lagos-based investment bank, warn that Nigerians should not expect significant relief from high prices soon.

Reacting to the inflation data released by the National Bureau of Statistics (NBS) last week, Comercio Partners stated: “Headline inflation has cooled slightly, but core inflation and food inflation have increased. This suggests that while overall inflation is easing, essential goods and services are still seeing high prices.”

The report noted that May’s year-on-year headline CPI was 33.95%, up from 33.69% in April. Month-on-month, the headline inflation rate for May 2024 decreased slightly to 2.14%, down from April’s 2.29%.

Food inflation rose to 40.66% in May, slightly up from 40.53% in April. Year-on-year, it surged by 15.84% from 24.82% in May 2023. This increase was driven by higher prices for millet flour, garri, beans, wheat flour, semovita, and other food items.

Commenting on the impact, Comercio Partners said: “High inflation, especially in food prices, has reduced purchasing power and negatively affected consumer spending, which is crucial for economic growth. Persistent core inflation indicates ongoing cost pressures affecting business costs and investment decisions.

Several companies, including Huggies, Microsoft, and Meta, have shut down operations due to the harsh macroeconomic environment. These closures highlight the unfavorable conditions for business operations, likely increasing unemployment and reducing consumer spending power.”

They added: “While inflation shows signs of a slight slowdown, it remains high. Significant relief from high prices is unlikely for Nigerians in the immediate future.”

In response to soaring inflation, the Central Bank’s decision to raise the benchmark interest rate to a historic 24.75% underscores its commitment to containing inflation. However, this aggressive approach may hinder economic growth.