Inflation Tempers Christmas Spending in Nigeria
Nigeria’s inflation rate tempered consumer holiday spending, analysts have gathered amidst expectation that high prices of goods and services will persist in the first quarter of 2024.
In 2023, the headline inflation rate has maintained an uptrend throughout the year, closing at 28.2% in November as the apex bank inflation-fighting measures failed. High prices forced households to ration their income among competing demands, a development that impacts sales levels across the local market.
With the worsening price instability, analysts see no respite in sight, expecting inflation to get worse down the year. In its projection, Afrinvest estimated consumer inflation to close at 29.3% after 11 months uptrend.
“The outlook for December is upward biased, despite the removal of FX restriction on 43 items and declining global inflation. We expect firm seasonal goods and services demand due to the festive season to contrast the subdued harvest season”, the investment firm said in a commentary note.
Apart from individual spending reduction, companies were noted to have cut their spending on gifts while 13th month salary payments become out of reach for a large number of workers in Nigeria.
In November, headline inflation rate increased to 28.2 per cent, up by 0.87 per cent from 27.33 per cent recorded in October, the National Bureau of Statistics (NBS) said in a report published on its website.
The Bureau stated in its Consumer Price Index (CPI) and Inflation Report for November released in Abuja that the November 2023 rate was 6.73 per cent higher than what was recorded in November 2022. In November 2022, the headline inflation rate stood at 21.47 per cent.
It added that the increase in the headline index for November 2023 on a year-on-year basis and month-on-month basis was attributable to increases in items in the basket of goods and services at the divisional level.
Increases were observed in food and non-alcoholic beverages, housing, water, electricity, gas, and other fuels, clothing and footwear, and transport.
There were increases also in furnishing, household equipment and maintenance, education, health, miscellaneous goods and services, restaurants and hotels, alcoholic beverages, tobacco and kola, recreation and culture, and communication, it stated.
The NBS stated also that on a month-on-month basis, the headline inflation rate in November was 2.09 per cent, which was 0.35 per cent higher than the rate recorded in October at 1.73 per cent.
“This means that in November, the rate of increase in the average price level is more than the rate of increase in the average price level in October,’’ it stated. BUA Reduces Cement Price, Plans Further Review
It added that the percentage change in the average CPI for the 12 months ending November 2023 over the average of the CPI for the previous corresponding 12-month period was 24.01 per cent.
“This indicates a 5.64 per cent increase compared to 18.37 per cent recorded in November 2022,’’ it stated. The report indicated that food inflation rate in November increased to 32.84 per cent on a year-on-year basis, which was 8.72 per cent higher compared to the rate recorded in November 2022 at 24.13 per cent.
“The rise in food inflation on a year-on-year basis is caused by increases in prices of oil and fats, bread, cereals, fish, potatoes, tubers, fruits, meat, vegetables, coffee, tea and cocoa,’’ it stated.
It added that on a month-on-month basis, the food inflation rate in November was 2.42 per cent, which was a 0.51 per cent increase compared to the rate recorded in October 2023 at 1.91 per cent.
“The rise in food inflation on a month-on-month basis was caused by an increase in the average prices of bread and cereals, oil and fat, meat, coffee, tea and cocoa, potatoes and other tubers.
“All items, less farm produce and energy or core inflation, which excludes the prices of volatile agricultural produce and energy, stood at 22.38 per cent in November on a year-on-year basis.
“This increased by 4.39 per cent compared to 17.99 per cent recorded in November 2022. The exclusion of petrol is due to the deregulation of the commodity by removal of subsidy,’’ the NBS stated.
It noted that the highest increases were recorded in prices of transportation by road and by air; medical services, actual and imputed rentals for housing, pharmaceutical products and accommodation. The NBS said on a month-on-month basis, the core inflation rate was 1.53 per cent in November 2023.
“This indicates a 0.14 per cent rise compared to what was recorded in October 2023 at 1.39 per cent. The average 12-month annual inflation rate was 20.35 per cent for the 12 months ending November 2023; this was 4.66 per cent points higher than the 15.69 per cent recorded in November 2022,’’ it stated.
It added that on a year-on-year basis, the urban inflation rate in November was 30.21 per cent, which was 8.13 per cent higher than the 22.09 per cent recorded in November 2022.
“On a month-on-month basis, the urban inflation rate was 2.31 per cent in November representing a 0.41 per cent increase compared to October 2023 at 1.81 per cent,’’ it added.
The report said on a year-on-year basis in November, the inflationary rate in rural areas was 26.43 per cent, which was 5.55 per cent higher compared to the 20.88 per cent recorded in November 2022.
“On a month-on-month basis, the rural inflation rate was 1.99 per cent, which increased by 0.31 per cent compared to October 2023 at 1.67 per cent,’’ it stated.
On states’ profile analysis, the report showed that the all-items inflation rate on a year-on-year basis in November, was highest in Kogi at 33.28 per cent, followed by Lagos at 32.30 per cent, and Rivers at 32.25 per cent.
The slowest rise in headline inflation on a year-on-year basis was recorded in Borno at 22.47 per cent, followed by Katsina at 24.91 per cent, and Plateau at 25.53 per cent.
The report added that in November 2023, the all-items inflation rate on a month-on-month basis was highest in Kano at 3.55 per cent, followed by Kebbi at 3.34 per cent, and Borno at 3.24 per cent. Taraba was at 0.74 per cent, followed by Anambra at 1 per cent, while Enugu State at 1.18 per cent, recorded the slowest rise in month-on-month inflation,’’ the NBS stated.
The report said on a year-on-year basis, food inflation was highest in Kogi at 41.29 per cent, followed by Kwara at 40.72 per cent, and Rivers at 40.22 per cent. Bauchi at 26.14 per cent, followed by Borno at 27.34 per cent and Jigawa at 27.63 per cent recorded the slowest rise in food inflation on a year-on-year basis.
The report showed, however, that on a month-on-month basis, food inflation was highest in Cross River at 4.37 per cent, followed by Edo at 3.95 per cent, and Rivers at 3.91 per cent. Anambra at 0.63 per cent, followed by Oyo at 0.91 per cent and Bauchi at 1 per cent, recorded the slowest rise in inflation on a month-on-month basis, the NBS stated.
