Nigeria’s inflationary woes deepened in December 2024, with the headline inflation rate reaching 34.80%, according to the latest Consumer Price Index (CPI) report released by the National Bureau of Statistics (NBS) in January 2025.
This represents a slight increase from November’s 34.60% and underscores the persistent challenges facing the Nigerian economy.
Food Inflation Remains a Dominant Force
The report revealed that food and non-alcoholic beverages continued to be the primary drivers of inflation, contributing a substantial 18.02% to the overall figure. This persistent surge in food prices has significant implications for low-income households, as it erodes their purchasing power and exacerbates food insecurity.
Housing and Utilities Exacerbate Cost of Living
Furthermore, housing and utilities costs remained elevated, contributing 5.82% to the overall inflation rate. This factor, coupled with rising food prices, significantly increases the overall cost of living for Nigerian households, particularly in urban areas.
Year-on-Year Inflation Shows Significant Increase
The year-on-year inflation rate surged by 5.87 percentage points from December 2023’s 28.92%, highlighting the accelerating pace of price increases across the economy. This rapid escalation underscores the deteriorating economic conditions and the mounting pressure on household budgets.
Twelve-Month Average Inflation Reaches 33.24%
The twelve-month average inflation rate for 2024 stood at a concerning 33.24%, marking an 8.58 percentage point increase compared to the previous year. This sustained rise in prices signifies a deepening cost-of-living crisis for Nigerians, with significant implications for poverty and social stability.
Month-on-Month Inflation Shows Slight Deceleration
While the overall trend remains concerning, there was a slight deceleration in the month-on-month inflation rate, dropping to 2.44% in December from 2.64% in November. This marginal improvement suggests a modest slowdown in the pace of price increases, although the overall inflationary pressures remain significant.
Urban Inflation Exacerbates Regional Disparities
The report highlighted a significant urban-rural divide in inflation rates. Urban inflation stood at 37.29%, considerably higher than rural inflation at 32.47%. This disparity underscores the uneven impact of inflation across different regions and exacerbates existing economic inequalities.
Wide Range of Inflation Rates Across States
A closer look at state-level data revealed stark contrasts in inflation experiences. Bauchi state recorded the highest headline inflation at 44.06%, followed by Sokoto at 42.43% and Kebbi at 41.47%.
Read Also: CBN Slaps Banks with N1.35 Billion Fine for Cash Shortages
In contrast, Katsina registered the lowest rate at 28.33%, with Delta and Imo following at 29.23% and 29.99% respectively.
This significant variation in inflation rates across states highlights the complex and nuanced nature of the inflationary pressures facing the Nigerian economy.
Policy Challenges and Regional Considerations
These regional disparities pose significant challenges for policymakers. A one-size-fits-all approach to addressing inflation may not be effective in a context of such diverse economic conditions across the country. Targeted interventions and policies that consider the specific needs and circumstances of different regions are crucial to effectively combat inflation.
Effectiveness of Current Policies Questioned
The persistent north-south variations in inflation rates raise concerns about the effectiveness of current monetary and fiscal policies in addressing the inflationary challenges faced by different parts of the country. A comprehensive review of existing policies and a reassessment of their regional impact may be necessary to ensure that they are effectively mitigating the adverse effects of inflation across the nation.
If You Ask Me
The persistent rise in inflation continues to pose a significant threat to the economic well-being of Nigerian households. The continued dominance of food inflation, coupled with rising housing and utility costs, is significantly eroding purchasing power and exacerbating economic hardship.
The sustained rise in inflation demands urgent and decisive action from policymakers to mitigate its adverse effects on the Nigerian economy and ensure a more equitable and sustainable future for all citizens.