In August, Nigeria saw its highest inflation rate in 18 years, just before a crucial rates decision.

In August, Nigeria experienced its highest inflation rate in 18 years, registering at 25.8% according to official data. This surge in prices comes as Africa's largest economy grapples with escalating costs, setting the stage for a central bank interest rate decision later this month.

President Bola Tinubu's removal of a long-standing, albeit costly, petrol subsidy and the cessation of exchange controls in May led to a spike in prices across various sectors, from food to transportation, sparking discontent among unions who have threatened to strike.

The August inflation figure marked an eighth consecutive monthly increase from July's 24.08%, exacerbating a cost of living crisis further intensified by Tinubu's reforms, as reported by the National Bureau of Statistics (NBS). Official records indicate that the last time Nigerians faced such high inflation was in August 2005.

Razia Khan, Managing Director and Chief Economist for Africa and the Middle East at Standard Chartered, noted, "Nigerian inflation rose faster than expected in August, a month that typically sees more subdued inflation pressures."

Economic analysts identified several key drivers of Nigeria's inflation, including naira depreciation, elevated fuel and food prices, increased logistics expenses, and the expansion of money supply.

Khan added, "The inflation data, in our view, only partially reflects the removal of the subsidy. Much of the pre-existing pressure stemmed from Nigeria's monetary policy stance in the months leading up to this outcome, along with the ongoing naira depreciation on the parallel market."

Contrary to analysts' projections, the central bank implemented a modest 25 basis points rate hike in July. The next rate decision is scheduled for September 26, with some analysts anticipating a more stringent approach.

The National Bureau of Statistics (NBS) reported that food inflation, constituting a significant portion of Nigeria's inflation index, rose to 29.34% in August from 26.98% in July, driven by an increase in the prices of essential staples.

Despite the controversy surrounding his upheld presidential election victory, Tinubu remains steadfast in his commitment to the reforms. In contrast, labor unions argue that these measures have disproportionately affected the less privileged and advocate for their reversal.