Again, Nigeria’s inflation rises in twelfth consecutive month
…As headline inflation hits 28.92%
…Stears predicts 31.85% annual inflation, recommends dollar illiquidity to tackle inflation
By Sodiq Adelakun, Lagos and Mathew Denis, Abuja
Inflation in Nigeria continued to rise for the twelfth consecutive month in December, 2023 with the headline inflation rate reaching 28.92 percent, up from 28.20 percent in November.
The National Bureau of Statistics released its consumer price index report on Monday, revealing the ongoing impact of inflation on the country’s economy.
The figure represents a 0.72 percent increase from the 28.20 percent recorded in November 2023. On a year-on-year basis, the headline inflation rate in December was 7.58 percent higher than the rate recorded in November 2022 at 21.34 percent.
The report attributed the increase in the headline index for December 2023 to the rise in some items in the basket of goods and services at the divisional level.
It said these increases were observed in food and non-alcoholic beverages, housing, water, electricity, gas, and other fuel, clothing and footwear, and transport.
Others were furnishings, household equipment and maintenance, education, health, miscellaneous goods and services, restaurants and hotels, alcoholic beverage, tobacco and kola, recreation and culture, and communication.
In addition, the report said, on a month-on-month basis, the headline inflation rate in December 2023 was 2.29 percent, which was 0.20 percent higher than the rate recorded in November 2023 at 2.09 percent.
“This means that in December 2023, the rate of increase in the average price level is more than the rate of increase in the average price level in November 2023.”
It said the percentage change in the average CPI for the 12 months ending December 2023 over the average of the CPI for the previous corresponding 12-month period was 24.66 percent.
“This indicates a 5.81 percent increase compared to 18.85 percent recorded in December 2022.”
The report said the food inflation rate in December increased to 33.93 percent on a year-on-year basis, which was 10.18 percent higher compared to the rate recorded in December 2022 at 23.75 percent.
“The rise in food inflation on a year-on-year basis is caused by increases in prices of bread and cereals, oil and fat, potatoes, yam and other tubers, fish, meat, fruit, milk, cheese, and egg.”
It said on a month-on-month basis, the food inflation rate in December was 2.72 percent, which was a 0.30 percent increase compared to the rate recorded in November 2023 at 2.42 percent.
“The rise in food inflation on a month-on-month basis was caused by an increase in the average prices of oil and fat, meat, bread and cereals, potatoes, yam and other tubers, fish and milk, cheese, and egg.”
The report said that “All items less farm produce and energy” or core inflation, which excludes the prices of volatile agricultural produce and energy, stood at 23.06 per cent in December on a year-on-year basis.
“This increased by 4.85 percent compared to 18.21 percent recorded in December 2022.
“The exclusion of the PMS is due to the deregulation of the commodity by removal of subsidy.”
It said the highest increases were recorded in prices of passenger transport by road, medical services, actual and imputed rentals for housing, passenger transport by air, pharmaceutical products, accommodation service, etc.
The NBS said on a month-on-month basis, the core inflation rate was 1.82 percent in December 2023.
“This indicates a 0.29 percent rise compared to what was recorded in November 2023 at 1.53 percent.
“The average 12-month annual inflation rate was 20.76 percent for the 12 months ending December 2023, this was 4.74 percent points higher than the 16.02 percent recorded in December 2022.”
The report said on a year-on-year basis in December, the urban inflation rate was 31.00 per cent, which was 8.98 per cent higher compared to the 22.01 per cent recorded in December 2022.
“On a month-on-month basis, the urban inflation rate was 2.42 percent in December representing a 0.19 percent increase compared to November 2023 at 2.23 percent.”
The report said on a year-on-year basis in December, the rural inflation rate was 27.10 percent, which was 6.38 percent higher compared to the 20.72 percent recorded in December 2022.
“On a month-on-month basis, the rural inflation rate was 2.17 percent, which increased by 0.18 percent compared to November 2023 at 1.99 percent.”
On states’ profile analysis, the report showed in December, all items inflation rate on a year-on-year basis was highest in Kogi at 35.58 percent, followed by Lagos at 32.33 percent, and Rivers at 32.16 percent.
It, however, said the slowest rise in headline inflation on a year-on-year basis was recorded in Borno at 23.27 percent, followed by Taraba at 24.92 percent, and Katsina at 26.52 percent.
The report, however, said in December 2023, all items inflation rate on a month-on-month basis was highest in Bayelsa at 3.66 percent, followed by Bauchi at 3.51 percent, and Oyo at 3.45 percent.
“Nasarawa at 1.36 percent, followed by Delta at 1.49 percent and Sokoto at 1.58 percent recorded the slowest rise in month-on-month inflation.”
The report said on a year-on-year basis, food inflation was highest in Kogi at 44.73 percent, followed by Kwara at 41.33 percent, and Imo at 39.54 percent.
“Bauchi at 27.49 percent, followed by Jigawa at 27.98 percent and Sokoto at 28.72 percent recorded the slowest rise in food inflation on a year-on-year basis.”
The report, however, said on a month-on-month basis, food inflation was highest in Bayelsa at 4.42 percent, followed by Ogun at 4.11 percent, and Enugu at 4.03 percent.
“While Nasarawa at 1.48 percent, followed by Delta at 1.65 percent and Niger at 1.67 per cent, recorded the slowest rise in inflation on a month-on-month basis.”
Meanwhile Stears, a leading economic analysis and data-driven insights provider in its 2024 African Outlook Report has predicted a 31.85% annual inflation for Nigeria.
In its macroeconomic Outlook for Nigeria, Stears projected an average annual inflation rate between 27.59 percent to 31.85 percent for 2024, considering the current economic climate and the depreciating naira.
“We anticipate the CBN will maintain orthodoxy and continue its tightening policy in the near term to address inflationary pressures,” the report noted.
The research body also recommended that an immediate action on dollar illiquidity is crucial for effective inflation management.
“In the longer term, enhancing productivity, a task for fiscal authorities, will be key,” the report stated.
In 2024, Africa’s overall growth is forecasted at 4.0 percent, a notable increase from 3.3 percent in 2023, positioning it as the second-highest globally, trailing only Asia (4.8 percent). East Africa takes centre stage in this growth narrative, exhibiting consistently higher growth rates than the rest of the continent. Rwanda, Tanzania, Uganda, and Kenya are identified as key drivers, collectively contributing significantly to the region’s economic resurgence.
Dumebi Oluwole, Senior Economist at Stears, underscores the significance of inflation as a barometer of economic health and advocates for the urgent need to address the persistent challenge of currency depreciation. The report reveals a closer alignment of the Kenyan Shilling (KES) to its fair value, shedding light on the delicate balance between inflation dynamics and investor attractiveness.
He explains, “The elimination of petrol subsidies has significantly heightened the cost of living for consumers, leading to an overall uptick in inflation. Coupled with the devaluation of the naira, this has precipitated higher exchange rates, complicating the economic landscape for both consumers and businesses.”
Stears emphasises the need for strategic interventions to enhance liquidity and stabilise the exchange rate, highlighting the importance of collaborative initiatives between the government, regulatory bodies, and the private sector for sustained economic growth.
