The National Bureau of Statistics (NBS) released Nigeria’s monthly Consumer Price Index (CPI) report for Nigeria last week Friday, revealing a headline inflation rate of 28.2% for November 2023.
This according to the Bureau, represents the eleventh consecutive month of increase so far in the year and the highest level since July 2005 (over 18 years).
Year-to-date, Nigeria’s inflation rate has increased by 7.21% points, the fastest pace recorded since the economic recession in 2016.
Further breakdown of the report showed that the surge was largely driven by the food prices, which have been negatively affected by insecurity in the food-producing regions, rising transport costs, and flooding, amongst other underlying factors.
While Nigeria has been grappling with a double-digit inflation rate over the last 7 years, the cannon that broke the horseback was the removal of the petrol subsidy in May 2023 by the new administration of President Tinubu saw the rate surge at unprecedented levels not seen in decades.
Currently, Nigeria is trailing its worst inflation level in over 18 years as of November 2023. However, a simple time series forecast shows that Nigeria’s inflation rate will rise to at least 28.28% in December, all things being equal. This would effectively bring Nigeria’s inflation to its worst level since 1996 (over 27 years).
According to the NBS, the major drivers of Nigeria’s inflation in November 2023 were food and beverages, road and air transport, pharmaceutical drugs, and accommodation amongst others.
Despite the conservative forecast of 28.28% for the month of December, prices could be further inflated as a result of festivities in the country during this period.
The possibility of petrol prices rising further to over N700 per litre could also worsen the current trend of inflation pressure. Recall that the World Bank had suggested that the government need to discontinue any form of petrol subsidy payments, which would translate to a payment of N750/litre for Nigerians.
The persistent cash scarcity in some regions of the country could also be a sticky area for inflation, as previous experience of cash draught followed with significant surge in prices.
Nigeria’s inflation is most likely to hit or surpass the 28.28% projection, resulting in its highest point in more than 27 years. However, the rate is expected to taper towards the second quarter of 2024 as the effect starts to set in.
The rising cost of goods and services in Nigeria amidst relatively fixed earnings, means more Nigerians are experiencing weakening purchasing power, pushing millions more Nigerians below the poverty line.
It is crucial for Nigerians to prioritize and tailor their expenses to meet their current earning capacity or seek to improve their income either by acquiring more relevant knowledge or diversifying.
Meanwhile, the CBN and the government need to come up with a cocktail of policies to tame this high trend of inflation that has resisted the effect of just interest rate hikes.
