Nigeria’s Inflation Rate for Dec. Estimated to Reach 35.20%
Nigeria’s inflation rate for December is expected to climb to 35.20%, analysts at Cowry Asset Limited said in a note. The National Bureau of Statistics (NBS) is set to release its December 2024 inflation report, and early projections from Cowry Research suggest a rise in headline inflation to 35.20%, up from 34.60% recorded in November 2024.
According to analysts, this marks a continuation of the inflationary trend observed over the past months. The annual average inflation rate for 2024 is also expected to climb significantly, Cowry said, reaching 33.21%, compared to 24.52% in the preceding year, underscoring persistent price pressures across the economy.
The report noted that several factors have contributed to this anticipated rise in inflation. The festive season played a critical role, as heightened demand for goods, services, travel, and accommodation during the holiday period exerted significant upward pressure on prices, analysts explained.
They noted that the seasonal spike in spending added to an already challenging inflationary environment, driven by structural and economic issues.
The depreciation of the naira has remained a key factor fueling inflation, by market consensus. The weakened currency has increased the cost of imports, particularly affecting essential commodities and consumer goods, Cowry Asset research unit emphasised.
Additionally, energy costs have continued to soar following the removal of fuel subsidies, further compounding inflationary pressures.
“This has had a ripple effect on transportation costs and production expenses, both of which have significantly contributed to rising prices across various sectors”.
In the note, analysts also said food inflation continues to dominate as a major driver of overall inflation. They noted that the disruption of agricultural production and distribution due to recurring insecurity and flooding in key farming regions has led to sharp increases in food prices.
“In November 2024, food inflation surged to 39.93% year-on-year, compared to 32.84% in November 2023, and this trend is expected to persist into December.
Imported food inflation has also seen a steady increase, reflecting the higher costs of commodities such as fish, rice, and dairy products due to global price trends and local currency challenges.
Core inflation has equally exhibited an upward trajectory, reaching a historic high of 28.75% year-on-year in November. Transportation costs, influenced by high energy prices, have played a significant role, with transportation inflation rising to 30.54% year-on-year from 29.26% in October.
While there was a marginal decline in the month-on-month core inflation rate from 2.14% in October to 1.83% in November, this provides little relief against the entrenched price pressures affecting consumers and businesses alike.
The inflationary environment in Nigeria remains a cause for concern, with various economic, structural, and seasonal factors converging to push prices to record levels.
The anticipated December inflation figures are expected to highlight the deepening cost of living crisis and the urgent need for targeted interventions to address these challenges.
Despite the Central Bank of Nigeria’s (CBN) tight monetary policy stance, including raising the benchmark interest rate to 27.50% in November, inflationary pressures have proven resistant.
Structural bottlenecks such as inadequate infrastructure, high energy costs, and logistical inefficiencies continue to undermine the effectiveness of monetary policy measures, leaving consumers and businesses grappling with escalating costs.
While inflationary pressures may begin to moderate in 2025 due to base effects, the method of financing the Federal Government’s projected budget deficit of N13.08 trillion for 2025 could create additional inflationary pressure.”. Stanbic IBTC Adds Fixed Income Asset into Securities Lending Services
