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The National Bureau of Statistics (NBS) has reported that Nigeria’s inflation rate surged to 34.60% in November 2024, reflecting a 0.72 percentage-point increase compared to 33.88% in October 2024. This marks a significant rise in the country’s year-on-year inflation rate, which was recorded at 28.20% in November 2023.

The latest data highlights persistent economic challenges as rising food prices and core inflation contribute to the sharp increase. Below, we analyze the key figures, regional trends, and their implications for the Nigerian economy.

Key Inflation Metrics for November 2024

Headline Inflation Rate

• Year-on-Year (YoY): 34.60%, up by 6.40 percentage points from 28.20% in November 2023.
• Month-on-Month (MoM): 2.638%, a slight decline of 0.002 percentage points from 2.640% in October 2024.
• 12-Month Average: The annual average inflation rate for the 12 months ending November 2024 was 32.77%, a sharp increase from 24.01% in November 2023.

Food Inflation

Food inflation played a significant role in driving the overall rise in the inflation rate:

• Year-on-Year: 39.93%, a staggering increase of 7.08 percentage points from 32.84% in November 2023.
• Month-on-Month: 2.98%, up by 0.05 percentage points from 2.94% in October 2024.
• 12-Month Average: 38.67%, an increase of 11.58 percentage points compared to 27.09% in November 2023.

Key contributors to food inflation include:

• Staples: Yam, Water Yam, Coco Yam, Rice, Guinea Corn, and Maize Grains.
• Proteins: Catfish (dried), Mudfish, Goat Meat, and Frozen Chicken.
• Oils: Palm Oil and Vegetable Oil.
• Other Items: Milk, Cheese, Eggs, and various cereals.

Core Inflation (Excluding Volatile Items)

Core inflation, which excludes volatile agricultural products and energy prices, stood at:

• Year-on-Year: 28.75%, a rise of 6.36 percentage points from 22.38% in November 2023.
• Month-on-Month: 1.83%, down by 0.30 percentage points from 2.14% in October 2024.
• 12-Month Average: 26.64%, up from 20.35% in November 2023.

The NBS highlighted key contributors to core inflation, including:

• Transport costs (taxi journeys, intercity bus rides, motorcycle trips).
• Housing expenses (rents and imputed rentals).
• Personal services (haircuts, women’s hairdressing, and personal grooming).

Regional Inflation Trends

Headline Inflation by State

• Highest Year-on-Year Inflation:
  • Bauchi: 46.21%
  • Kebbi: 42.41%
  • Anambra: 40.48%
• Lowest Year-on-Year Inflation:
  • Delta: 27.47%
  • Benue: 28.98%
  • Katsina: 29.57%
• Highest Month-on-Month Inflation:
  • Yobe: 5.14%
  • Kebbi: 5.10%
  • Kano: 4.88%
• Lowest Month-on-Month Inflation:
  • Adamawa: 0.95%
  • Osun: 1.12%
  • Kogi: 1.29%

Food Inflation by State

• Highest Year-on-Year Food Inflation:
  • Sokoto: 51.30%
  • Yobe: 49.69%
  • Edo: 47.77%
• Lowest Year-on-Year Food Inflation:
  • Kwara: 31.39%
  • Kogi: 32.95%
  • Rivers: 33.27%
• Highest Month-on-Month Food Inflation:
  • Yobe: 6.52%
  • Kano: 5.95%
  • Kebbi: 5.68%
• Lowest Month-on-Month Food Inflation:
  • Borno: 0.76%
  • Adamawa: 0.90%
  • Kogi: 1.21%

Driving Factors Behind the Inflation Surge

1. Food Price Increases:
   Food inflation remains the primary driver, fueled by rising costs of staples, oils, proteins, and dairy products. Disruptions in supply chains, insecurity in farming regions, and currency fluctuations have exacerbated food price volatility.
2. Core Inflation Contributors:
   Rising transportation costs, housing expenses, and personal service fees contributed significantly to the core inflation rate. These costs reflect broader economic pressures on energy and infrastructure.
3. Currency Depreciation:
   Although the Naira has seen some stabilization in recent weeks, the impact of its earlier depreciation continues to affect import-dependent sectors, driving up costs for essential goods.
4. Policy Adjustments:
   The removal of fuel subsidies and liberalization of foreign exchange policies earlier in 2024 have had ripple effects across sectors, contributing to inflationary pressures.

Implications for Nigeria’s Economy

Household Impact

The rising inflation rate, particularly in food prices, continues to erode purchasing power, leaving many Nigerians struggling to meet basic needs. The impact is especially pronounced in urban areas, where the Urban Inflation Rate rose to 37.10% YoY, compared to 32.27% in rural areas.

Business and Investment Climate

Persistent inflation undermines business confidence, as rising input costs reduce profitability. Investors may hesitate to commit to long-term projects due to uncertainty surrounding the economic environment.

Policy Challenges

The Nigerian government faces a delicate balancing act in implementing policies to curb inflation without stifling economic growth. The Central Bank of Nigeria (CBN) may consider further interest rate hikes to address inflationary pressures, though this could hamper borrowing and investment activities.

Government’s Response and Future Outlook

Potential Policy Interventions

• Monetary Policy Adjustments:
  The CBN may increase interest rates to curb inflation, though the effectiveness of this measure in the current economic climate remains debated.
• Boosting Local Production:
  Expanding agricultural output and improving supply chains are critical to reducing food inflation. Investments in infrastructure and security for farming communities could help stabilize prices.
• Social Intervention Programs:
  Expanding social safety nets and subsidy programs could provide temporary relief for vulnerable households affected by rising costs.

Short-Term Projections

While the government has implemented reforms aimed at stabilizing the economy, inflation is expected to remain high in the short term as the effects of subsidy removal and currency devaluation continue to ripple through the economy.

Conclusion

The rise in Nigeria’s inflation rate to 34.60% in November 2024 underscores the urgent need for targeted policy interventions to address rising food and core inflation. With food prices driving much of the increase, boosting agricultural productivity and addressing supply chain inefficiencies will be critical. As Nigerians grapple with the effects of inflation, the government must act decisively to balance economic reforms with measures that protect households and businesses.