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Nigerian Inflation Hits Three-Decade High

In December 2023, Nigeria experienced a significant surge in inflation, reaching its highest annual pace in almost thirty years, according to the National Bureau of Statistics. The headline inflation rate for the month rose to 28.92%, up from 28.20% in November 2023, reflecting a 0.72% increase. On a year-on-year basis, this rate was 7.58% points higher compared to December 2022, which recorded a rate of 21.34%, indicating a concerning upward trend.

The Consumer Price Index (CPI) for the twelve-month period ending December 2023 exhibited a 24.66% change, signifying a 5.81% increase from the 18.85% reported in December 2022. This data underscores the persistent inflationary pressures that have been a recurring challenge for Africa’s largest economy.

Breaking down the inflation figures, the contributions of various divisions to the headline index reveal the sectors driving the upward trajectory. Food and Non-Alcoholic Beverages led the pack with a contribution of 14.98%, followed by Housing, Water, Electricity, Gas & Other Fuel (4.84%), and Clothing & Footwear (2.21%). The rise in prices was also notable in Transport (1.88%), Furnishings & Household Equipment & Maintenance (1.45%), and Education (1.14%), among others.

The urban inflation rate witnessed a substantial increase, reaching 31.00% year-on-year in December 2023, marking an 8.98% point rise compared to December 2022. On a month-on-month basis, urban inflation stood at 2.42%, reflecting a 0.19% point increase from November 2023. The corresponding twelve-month average for urban inflation was 26.22%, up by 6.83% points from December 2022.

Rural areas also experienced a surge in inflation, with a year-on-year rate of 27.10% in December 2023, representing a 6.38% increase compared to the same period in 2022. On a month-on-month basis, rural inflation was 2.17%, up by 0.18% points from November 2023. The twelve-month average for rural inflation in December 2023 was 23.25%, indicating a 4.91% rise from the previous year.

The food inflation rate in December 2023 was particularly alarming, standing at 33.93% year-on-year. This represented a 10.18% point increase compared to December 2022. On a month-on-month basis, food inflation reached 2.72%, showing a 0.30% point increase from November 2023. The average annual rate of food inflation for the twelve months ending December 2023 was 27.96%, a notable 7.02% points higher than the average recorded in December 2022.

Core inflation, excluding volatile items such as farm produce and energy, registered at 23.06% in December 2023 on a year-on-year basis, reflecting a 4.85% increase from December 2022. On a month-on-month basis, core inflation was 1.82%, up by 0.29% from November 2023. The average twelve-month annual inflation rate for core items in December 2023 was 20.76%, indicating a 4.74% point increase from the previous year.

The geographical analysis of inflation rates in December 2023 revealed significant variations. Kogi (35.58%), Lagos (32.33%), Rivers (32.16%) had the highest year-on-year headline inflation rates, while Borno (23.27%), Taraba (24.92%) and Katsina (26.52%) recorded the slowest rise. On a month-on-month basis, Bayelsa, Bauchi, and Oyo experienced the highest increases, while Nasarawa, Delta, and Sokoto recorded the slowest rise.

Economists, including Bloomberg Africa Economist Yvonne Mhango, attribute the soaring inflation to the halt in fuel subsidies, leading to increased transport costs, and the weakening of the naira. The inflation rate, exceeding the central bank’s target range of 6% to 9% since 2015, may prompt policymakers to consider substantial rate hikes in the first half of the year to address the mounting price pressures. The central bank, however, has not yet announced the date for its next monetary policy committee meeting.


Information for this briefing was found via Bloomberg and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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