Inflation Estimated to Settle at 35.20% in December
With unending price instability in Nigeria, analysts and investment firms expect inflation to continue to rise throughout the year. Due to weak naira and high fuel pump price of petrol, inflation rate has continued to tick after two disinflationary moment that were short-lived
The National Bureau of Statistics (NBS) report revealed that inflationary pressures remained elevated in November, as headline inflation increased by 72 bps to 34.60% year on year from 33.88% in October.
On a month-on-month basis, headline inflation remained steady at 2.65%, as the uptick in food inflation was offset by a moderation in core inflation.
Food inflation accelerated by 77 bps to 39.93% year on year and 2.98% month on month in November, primarily driven by price increases in key staples such as maize, grain, rice, palm oil, vegetable oil, potatoes, yam, and other tubers.
NBS reported that imported food inflation surged by 133 bps to 42.29% year on year in November, reflecting Naira depreciation and rising global food prices.
The Food and Agriculture Organisation’s (FAO) Food Price Index, comprising meat, dairy, cereals, vegetable oil, and sugar, rose by 0.5% m/m and 5.7% y/y to an average of 127.5 points in November—the highest level since April 2023.
According to Coronation Research, this was primarily driven by elevated prices of vegetable oil and dairy products. In November reading, Nigeria’s core inflation rose by 38 bps to 28.75% year on year during the review period, largely driven by cost pressures in the transportation sector and restaurant & hotels services.
However, the month-on-month core inflation measure eased to 1.83% from 2.14% in October, following the NNPC’s downward review of petrol prices in November.
Analysts at Coronation Research said persistent inflationary pressures continue to pose significant challenges to businesses and households. Elevated production costs have translated into higher operating expenses for businesses, many of which have been passed on to consumers through increased prices. This dynamic erodes household purchasing power and suppresses consumer demand.
To combat inflationary pressures, the monetary authority has deployed several measures, including an aggregate 875bps hike in the Monetary Policy Rate (MPR) to 27.50% during the year, increases in the Cash Reserve Ratio (CRR), and consistent Open Market Operation (OMO) auctions.
“While these measures aim to tighten liquidity and curb inflation, there remains a need for stronger collaboration between fiscal and monetary authorities to address the structural drivers of inflation effectively.”.
Looking ahead, the research arm of Coronation Merchant Bank projects inflation to close at 35.20% year on year in December 2024. Seplat Energy Trades Flat Amidst Shares Re-Admission
