Nigeria experienced a concerning surge in headline inflation, reaching 28.92% in December 2023, compared to November 2023’s rate of 28.20%. This upward trajectory was predominantly driven by escalating prices of essential food items and the impact of energy costs on transportation, intensifying economic challenges.
Dr. Chinyere Almona, Director General of the Lagos Chamber of Commerce & Industry (LCCI), emphasized the need for heightened efforts in combating inflation, urging the Central Bank of Nigeria (CBN) to intensify its strategies. The LCCI expressed worry over the persistent increase in inflation, citing its negative effects on investment incentives, consumer incomes, spending power, and manufacturing productivity within the country.
December 2023 witnessed a 0.72% point increase in the headline inflation rate compared to November 2023. Both urban and rural inflation exhibited an upward trend throughout the year.
The food inflation rate in December soared to 33.93% year-on-year, a significant increase of 10.18% points from December 2022. Factors contributing to this surge included rising prices of bread and cereals, oil and fat, yam, and meat. The average annual rate of food inflation for the 12 months ending December 2023 was 27.96%, reflecting a 7.02% points increase from December 2022.
On a year-on-year basis, the headline inflation rate was 7.58% points higher compared to December 2022, standing at 21.34%. The continuous rise in headline inflation throughout December 2023 raised concerns among economic observers.
Dr. Almona anticipated economic agents, including households and businesses, to implement strategies to mitigate inflationary pressures. She stressed the importance of the CBN adopting a well-calibrated policy mix to address the unique challenges facing the Nigerian economy.
Dr. Muda Yusuf, Director of the Centre for the Promotion of Private Enterprise (CPPE), highlighted the detrimental effects of surging inflation on citizens’ welfare and small businesses. He called for urgent government intervention to address supply-side challenges, stabilize the exchange rate, tackle insecurity, accelerate domestic refining of petroleum products, and implement tax and fiscal reforms.
CardinalStone projected that inflation, which ended 2023 at a 27-year high of 28.9%, could peak at around 29.5% in the first quarter of 2024. The firm expects a disinflation from the second quarter of the year, with an average inflation rate of 22.0% in 2024, driven by base effects and the diminishing impact of significant gasoline price increases.
Despite the expected moderation, CardinalStone cautioned that the projected inflation remains above the long-run average of 14.0%, partly due to currency pressures.
