According to the National Bureau of Statistics (NBS), consumer prices in Nigeria soared at an unprecedented rate in December, reaching the largest annual surge in 20 years. An analysis of the inflation rate in Nigeria reveals that it has surged to its highest level since January 2003. The report from the Consumer Price Index rose to 28.92 percent in December 2023, surpassing the 28.20 percent recorded in November. December saw a surge in food inflation, accounting for half of the overall inflation rate, reaching 33.93 percent compared to November’s 32.84 percent, as reported by the authorities.
The surge in food inflation on an annual basis can be attributed to the uptick in the prices of various items such as oil and fat, bread and cereals, potatoes, yam and other tubers, fish, fruit, meat, vegetables, milk, cheese, and eggs. Analysts had previously forecasted that December’s rate would surpass the 18-year peak of 28.2 percent witnessed in November. Experts from KPMG had also previously predicted a significant surge in inflation in December 2023, expected to reach approximately 30 percent. This is primarily attributed to the combined effects of eliminating fuel subsidy and floating of foreign exchange.
Headline inflation rate increased by 7.58 percent.
Cardinal Stone analysts revealed in its 2024 Economic Outlook report that inflation closed at a 27-year high. According to the latest consumer price index report by the National Bureau of Statistics, the primary contributors to this increase in the headline index are food and non-alcoholic beverages, accounting for 14.98 percent. Following closely behind are housing water, electricity, gas, and other fuel at 4.84 percent, clothing and footwear at 2.21 percent, and transport at 1.88 percent), furnishings, household equipment and maintenance (1.45 percent and education at 1.14 percent.
Additional categories in the expenditure breakdown comprise of health, accounting for 0.87 percent, miscellaneous goods and services at 0.48 percent, restaurants and hotels at 0.35 percent, alcoholic beverages, tobacco, and kola at 0.31 percent, recreation and culture at 0.20 percent, and communication at 0.20 percent. The headline inflation, inflationary spike rates for the previous year witnessed a significant increase of 7.58 percent compared to the December 2022 rate, which stood at 21.34 percent. This report shows that December 2023 witnessed a significant surge in headline inflation rate on an annual basis, as compared to December 2022.
Core inflation reached 23.06 percent in December 2023.
Moreover, the inflation rate for December 2023 saw a month-over-month increase of 2.29 percent, surpassing the November 2023 rate by 0.20 percent. Hence, December showed a higher growth in average price levels compared to November. In December 2023, core inflation reached a significant 23.06 percent on a year-on-year basis. This measurement excludes the prices of volatile agricultural produces and energy. It marks a notable increase of 4.85 percent from the 18.21 percent recorded in December 2022.
In terms of price hikes, notable rises were witnessed in various sectors such as Road Passenger Transport, Healthcare Services, Air Passenger Transport, Housing Rentals (both real and estimated), pharmaceutical goods, and accommodation amenities. Nigeria’s inflation rate has been consistently climbing since February 2022, with the exception of a minor pause in December 2022, marking a continuous eleven-month surge. Inflation surge reportedly reached an 18-year high in November 2023, placing additional burden on the country’s central bank to address this mounting issue amidst a deepening crisis of rising living expenses in the county.
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NBS reported that inflation for consumers spiked to 28.20% in November, a significant jump from the previous month’s rate of 27.33%. Interestingly, this level of inflation hasn’t been witnessed in Nigeria since August 2005, according to official data. In December 2023, the World Bank issued a warning regarding the urgent need to combat inflation, tasking the central bank of Nigeria to implement stringent monetary policies, encouraging trust in the market through transparent foreign exchange pricing, and gradually eliminating ‘ways and means’ advances provided to the government.