Inflation data confirm low spirits Christmas, New Year for Nigerians

• Prices soar across the board

• High food, transport costs spike November index 

BUSINESS A.M. REPORTER

Pervading low spirits that have hung in the air for several months in Nigeria are manifesting in their fullness as the yuletide season of Christmas and New Year 2024 unfolds before Nigerians, a random consumer mood survey carried out in a limited part of Lagos has shown.

These low spirits are showing up in shops and markets on faces as Nigerians try to shop for the Christmas and new year celebrations with prices already raised to rooftops. Signs that this season’s celebrations were going to be heavily impacted by happenings in marketplaces began to emerge long before now. 

First, rising prices of foodstuffs for at least eight months had pointed to what was ahead. But it was the removal of fuel subsidy in May by President Bola Tinubu and the massive devaluation of the domestic currency, the naira, after the Central Bank of Nigeria announced it was floating the domestic currency that sent prices on a tailspin to the skies, say analysts familiar with happenings in the Nigerian economy. 

Now, inflation data for the country covering the month of November has put an official stamp on what were anecdotes told in several individual small gatherings across the country. Nigeria’s inflation rate rose for the eleventh month in a row, with the headline inflation rate rising to 28.20 percent in November 2023 from 27.33 percent in October 2023, according to the latest consumer price index (CPI) report published by the Nigerian Bureau of Statistics (NBS).

In November 2023, the inflation rate was higher than it was in the previous month, increasing by 0.87 percentage points compared to October 2023. Additionally, the headline inflation rate was 6.73 percentage points higher than it was in November 2022, showing an accelerating trend in inflation over the last year.

The NBS data showed that a general rise in food prices across Nigeria, triggered by the removal of fuel subsidies in May 2022 and supply chain disruptions, has had a significant impact on the country’s headline inflation rate. The impact of the fuel subsidy removal has not only driven up food prices, but has also had a knock-on effect on other areas such as transportation costs,  and further price increases across various sectors of the economy.

According to the NBS, the food inflation rate in November 2023 was 32.84 percent higher than it was in November 2022. This is an increase of 8.72 percentage points, showing a significant rise in the cost of food over the last year.

The NBS report attributed the rise in food inflation on a year-on-year basis to significant price increases in several categories, including bread and cereals, oil and fat, potatoes, yam and other tubers, fish, fruit, meat, vegetables and coffee, tea and cocoa. These increases reflect the rising costs of production, transportation and other inputs, which have put upward pressure on prices. In addition, the NBS noted that the weakening of the naira and other macroeconomic factors have contributed to the rise in food prices.

The NBS report showed that the month-on-month food inflation rate in November 2023 was 2.42 percent, an increase of 0.51 percentage points over the previous month. The increase was driven by rising prices of bread and cereals, oil and fat, meat, coffee, tea and cocoa, potatoes, yam and other tubers. These categories make up a large portion of the food basket, and their price increases have had a significant impact on overall food inflation.

The NBS report also looked at the average annual rate of food inflation over the past twelve months, and compared it to the previous twelve-month average. The average annual rate of food inflation for the twelve months ending in November 2023 was 27.09 percent, a 6.68 percentage point increase from the previous twelve-month average of 20.41 percent.

The report  showed that the core inflation rate, which excludes the prices of agricultural produce and energy, was 22.38 percent in November 2023 on a year-on-year basis. This was an increase of 4.39 percent compared to 17.99 percent recorded in November 2022. The report noted that the prices of passenger transport by road, medical services, passenger transport by air, actual and imputed rentals for housing, pharmaceutical products, accommodation services, and education had the highest increases.

The NBS also disclosed that core inflation on a month-on-month basis was 1.53 percent in November 2023, which was 0.14 percent higher than the 1.39 percent recorded in October 2023. The average twelve-month annual inflation rate for the twelve months ending in November 2023 stood at 20.35 percent, which was 4.66 percent higher than the 15.69 percent recorded in November 2022.

The statistics bureau also looked at inflation rates in urban areas, which are generally higher than in rural areas. On a year-on-year basis, the urban inflation rate in November 2023 was 30.21 percent, 8.13 percentage points higher than the previous year. On a month-on-month basis, the urban inflation rate in November 2023 was 2.23 percent, 0.41 percentage points higher than in October 2023. The average annual rate of urban inflation for the twelve months ending in November 2023 was 25.45 percent, 6.56 percentage points higher than the previous year.

According to the NBS report, the rural inflation rate in November 2023 was 26.43 percent on a year-on-year basis, 5.55 percentage points higher than in the previous year. On a month-on-month basis, the rural inflation rate was 1.99 percent, up 0.31 percentage points from the previous month. The average annual rural inflation rate for the twelve months ending in November 2023 was 22.71 percent, 4.83 percentage points higher than the previous year.