Nigerian Inflation Hits 29-Year High Ahead of CPI Overhaul
TLDR
- Nigeria’s annual inflation rate climbed to 34.8% in December, the highest in nearly three decades
- This marks an increase from 34.6% in November, with transportation costs driving the surge
- The inflation measure is set to be revised with the next release, as the NBS updates its methodology for the first time in 16 years
Nigeria’s annual inflation rate climbed to 34.8% in December, the highest in nearly three decades, according to the National Bureau of Statistics (NBS). This marks an increase from 34.6% in November, with transportation costs driving the surge. Food inflation eased slightly to 39.8%, while core inflation—excluding agriculture and energy—rose to 29.3%.
The inflation measure is set to be revised with the next release, as the NBS updates its methodology for the first time in 16 years. The changes, which rebase the consumer price index to 2024, will adjust item weightings. Food’s share will decrease from 51.8% to 40.1%, and housing, energy, and electricity will shrink from 16.7% to 8.4%.
The Central Bank of Nigeria (CBN) raised its benchmark interest rate by 875 basis points in 2024 to combat inflation. Governor Olayemi Cardoso anticipates easing price growth this year, with the next policy rate decision due February 18.
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Key Takeaways
Nigeria’s upcoming consumer price index overhaul could paint a softer inflation picture by reducing the weighting of high-inflation categories like food and housing. However, persistently high inflation remains a challenge for policymakers, especially in the context of surging transportation costs and broader economic pressures. The Central Bank’s aggressive rate hikes in 2024 reflect its commitment to stabilizing prices, though their effectiveness may depend on sustained fiscal reforms and improved supply chain dynamics. The upcoming February rate decision will signal how the bank balances inflation control with economic growth considerations in a high-inflation environment.
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