Nigeria’s Inflation Rate Accelerates to 31.70%

Nigeria’s Inflation Rate Accelerates to 31.70%

Nigeria’s headline inflation rate accelerated to 31.70% in February 2024, according to the National Bureau of Statistics (NBS) consumer price index report. Inflation worsened following the naira devaluation and adjustment made by FMDQ to the FX pricing methodology early in the year.

According to the statistics office, this translates to an increase of 180 basis points from 29.90% recorded in the previous month of January, to 31.70% in February. On a month-on-month basis, headline inflation increased by 48 basis points to 3.12% from 2.64% recorded in January.

The report showed that food inflation increased significantly by 251 basis points to 37.92% year on year, as against 35.41% in the comparable month. For most families, spending on food has increased despite declining volume. Companies are scaling back on production volume due to affordability issues in the market.

High inflation has pushed production costs higher, a situation worsened by another interest rate hike. This could increase job losses in the country. It is worth highlighting that the consumer price index is projected to continue to rise throughout the first half of 2024.

Analysts are expecting some moderation in the second half due to low base effects on the number. Low harvests from farm produce continue to affect food prices. The Nigerian food crisis has worsened in the current month as insecurity continues to trend, especially in the northern part.

The report suggests that the increase in food inflation on a year-on-year basis was influenced by an uptick in prices. Food items with price surge include bread and cereals, potatoes, yam and other tubers, fish, oil and fat, meat, fruit, coffee, tea, and cocoa.

Nigeria’s core inflation (all items less farm produce and energy) surged by 154 basis points to 25.13% year on year from 23.59 in January. 

The statistics office said the highest increase was recorded in prices of Passenger Transport by Road, Actual and Imputed Rentals for Housing, Medical Services, Pharmaceutical products, etc. However, on a monthly basis, the core index eased by 7 basis points to 2.17% in February from 2.24% in the comparable period in January. 

Urban Inflation

In February 2024, the Urban inflation rate was 33.66% (Y-o-Y), this was 10.87% points higher compared to the 22.78% recorded in February 2023. On a month-on month basis, the Urban inflation rate was 3.17% in February 2024, this was 0.45% points higher compared to January 2024 (2.72%).

The corresponding twelve-month average for the Urban inflation rate was 27.93% in February 2024. This was 7.48% points higher compared to the 20.45% reported in February 2023

Rural Inflation

In February 2024, the rural inflation rate stood at 29.99% on a year-on-year basis, marking an increase of 8.89% from February 2023’s rate of 21.10%. On a month-on-month basis, the rural inflation rate for February 2024 reached 3.07%, representing a 0.50% rise from January 2024’s 2.57%.

Additionally, the twelve-month average for the rural inflation rate in February 2024 was 24.61%, reflecting a significant increase of 5.28% from February 2023’s figure of 19.33%.

Food Inflation

In February 2024, the food inflation rate reached 37.92% on a year-on-year basis, marking a substantial increase of 13.57% from February 2023’s rate of 24.35%.

This upward trend in food inflation was driven by higher prices for bread and cereals, potatoes, yam and other tubers, fish, oil and fat, meat, fruit, coffee, tea, and cocoa.

On a month-on-month basis, the food inflation rate for February 2024 was 3.79%, showing a 0.58% increase compared to January 2024’s rate of 3.21%.

This increase in month-on-month food inflation was primarily due to a rise in the rate of price increases for bread and cereals, potatoes, yam & other tubers, fish, coffee, tea, and cocoa.

Core Inflation (All Items less Farm Produce and Energy)

In February 2024, the core inflation rate, which excludes volatile agricultural produces and energy, reached 25.13% on a year-on-year basis, marking a significant increase of 6.76% compared to February 2023’s rate of 18.37%. Notable price hikes were observed in categories such as passenger transport by road, actual and imputed rentals for housing, medical services, pharmaceutical products, and others.

On a month-on-month basis, the core inflation rate stood at 2.17% in February 2024, slightly lower than January 2024’s rate of 2.24%, reflecting a decline of 0.07%.

The average twelve-month annual inflation rate for the twelve months ending February 2024 was 21.72%, showing an increase of 4.97% from February 2023’s figure of 16.75%.

State Profiles

In February 2024, the year-on-year headline inflation rate was highest in Kogi (37.98%), Oyo (36.60%), and Bauchi (35.62%), while Borno (26.28%), Taraba (26.72%), and Benue (27.40%) experienced the slowest rise.

However, on a month-on-month basis, February 2024 saw the most significant increases in Kwara (6.42%), Kebbi (4.64%), and Adamawa (4.46%), whereas Katsina (1.93%), Cross River (1.98%), and Benue (2.33%) recorded the slowest rises in month-on-month inflation.

In February 2024, food inflation on a year-on-year basis peaked in Kogi (46.32%), Rivers (44.34%), and Kwara (43.05%), whereas Bauchi (31.46%), Plateau (32.56%), and Taraba (33.23%) saw the slowest increases.

Conversely, on a month-on-month basis, February 2024 witnessed the highest food inflation rates in Adamawa (5.61%), Yobe (5.60%), and Borno (5.60%), while Cross River (2.08%), Niger (2.56%), and Abuja (2.60%) experienced the least growth in food prices

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