Nigeria’s headline inflation rate is projected to ease by 25 basis points, settling at 34.5% in December 2024, according to a recent report by Afrinvest Research.
The anticipated moderation is attributed to the high base year effect on food inflation and a recovery in the naira’s exchange rate, which is expected to strengthen below N1,600/$.
In November, the National Bureau of Statistics reported a year-on-year inflation rate of 34.6%, reflecting a 70-basis-point increase and marking the highest level in over 20 years.
Month-on-month, however, the rate remained steady at 2.6%, bringing the year-to-date average monthly inflation to 2.5%.
This figure surpasses the Federal Government’s 1.8% projection, which implies an annualised inflation rate of 33.0%—significantly higher than the FG’s target of 21.4%.
Afrinvest’s report highlighted food inflation as the main driver of the surge, with an increase of 77 basis points to 39.9% year-on-year, the highest level in five months.
Month-on-month, food inflation rose by four basis points to 2.98%. This increase was attributed to poor main harvests caused by flooding, which damaged over 700,000 hectares of cropland across 31 states, compounded by insecurity and limited agricultural mechanisation.
Core inflation, excluding volatile items like food and energy, peaked at 28.8% year-on-year in November—the highest in over two decades.
However, the month-on-month core inflation rate dropped by 30 basis points to 1.8%, marking its lowest level since December 2023.
This reduction was linked to a 3.8% month-on-month decline in petrol prices, which averaged N1,140 per litre, alongside a recovery in the naira’s exchange rate to N1,672.69/$ in the official market and N1,720.00/$ in the parallel market.
The transportation and communication sectors also recorded slower price increases, rising by 18.5 and 0.4 percentage points, respectively, compared to October’s 20.1 and 0.8 percentage points.
For the entire year, the headline inflation rate is expected to average 33.1%, exceeding the Federal Government’s projection by 11.7 percentage points.
Experts have called for sustained economic policies to address inflationary pressures and stabilise the economy.
The PUNCH noted that the 34.6% inflation rate recorded in November represents a 0.72% rise from October’s 33.88%.
