According to the most recent Consumer Price Index report from the National Bureau of Statistics, Nigeria’s headline inflation rate for September 2024 increased to 32.70 percent after declining sequentially in the preceding two months of July and August.
The World Bank predicted that Nigeria would see further increases in inflation rates in September 2024, primarily due to a significant increase in the price of fuel. The most recent inflation figure is a marginal increase of 0.55 percent from the August 2024 figure of 32.15 percent, reflecting ongoing price pressures throughout the nation.
Year-over-year, inflation has increased by 5.98 percentage points compared to the 26.72 percent recorded in September 2023, BrandSpur national news stories report.
According to the report: “In September 2024, the Headline inflation rate was 32.70 percent relative to the August 2024 headline inflation rate of 32.15 percent. Looking at the movement, the September 2024 Headline inflation rate showed an increase of 0.55 percent compared to the August 2024 Headline inflation rate.
“On a year-on-year basis, the headline inflation rate was 5.98 percent points higher compared to the rate recorded in September 2023 (26.72 percent). This shows that the Headline inflation rate (year-on-year basis) increased in September 2024 when compared to the same month in the preceding year (i.e., September 2023).
“Furthermore, on a month-on-month basis, the Headline inflation rate in September 2024 was 2.52 percent, which was 0.30 percent higher than the rate recorded in August 2024 (2.22 percent). This means that in September 2024, the rate of increase in the average price level is higher than the rate of increase in the average price level in August 2024,” the report added.
In its Africa’s Pulse report published on Monday, the World Bank predicted that Nigeria would see higher inflation rates in September 2024, primarily due to a significant increase in fuel costs. The report noted that the government’s decision to implement market-based pricing, which initially tripled the cost of fuel in May 2023, led to an additional 40–45% rise in fuel costs in September 2024.
This development is expected to exacerbate inflationary pressures, as higher transportation and production costs will result in higher prices for goods and services nationwide. This rise in inflation continues a trend that started in June 2024, when headline inflation peaked, heavily influenced by increases in fuel prices and the ensuing rise in transportation and production costs.
The higher cost of fuel has had a knock-on effect on several sectors, raising the prices of goods and services throughout the nation.
Continuing, the report partly reads: “While the inflationary effects of a weakened naira in the first months of this year and the removal of the gasoline subsidy in the second half of 2023 appeared to be gradually subsiding, a further increase in gasoline prices by 40-45 percent in September may reverse the disinflationary trend. The consolidation of macroeconomic reforms should support higher growth in the country in 2025.”
According to the NBS report, food costs continue to be a major contributor to inflation. In September 2024, the rate of food inflation rose to 37.77 percent, a significant increase of 7.13 percent from the 30.64 percent reported during the same period the previous year. A major contributing factor to the rise in food inflation is the rising cost of essentials including rice, maize, beans, and yams. The rate of food inflation also grew month over month, rising from 2.37 percent in August 2024 to 2.64 percent in September 2024.
Urban areas experience higher rates of inflation than rural ones; in September 2024, urban inflation increased to 35.13% from 26.68% in the same month the previous year. In September 2023, the rate of inflation in rural areas was 24.94%, while it was as high as 30.49% in urban areas. Urban inflation was 2.67 percent month over month, while rural inflation was 2.39 percent.
Bauchi had the highest state-by-state inflation rate of 44.83 percent, followed by Jigawa (38.39 percent) and Sokoto (38.74 percent). On the other hand, the slowest increases in inflation were seen in Katsina (27.71%), Benue (26.90%), and Delta (26.35%). Sokoto experienced the biggest month-over-month gain, rising 4.63 percent, followed by notable increases in Taraba (4.07 percent) and Anambra (3.74%).
Core inflation, which does not include energy and volatile agricultural costs, increased to 27.43 percent in September 2024 from 21.84 percent in September 2023, a 5.59 percent gain. Transport, medical services, and rental accommodation all saw significant price rises. Following Nigeria’s harvest season, food prices declined, which led to a subsequent decline in inflation before it rose.
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The Central Bank of Nigeria’s Monetary Policy Committee decided last month to raise the benchmark interest rate, or monetary policy rate, to 27.25 percent. The financial markets were taken aback by this new rate, which was a 50 basis point hike from the 26.75 percent that the national bank had announced in July 2024.
The CBN was expected by financial experts to either keep or reduce interest rates after headline inflation declined for two months in a row. The CBN claims that recent economic developments about inflation and the stability of the foreign exchange market served as the foundation for the decision to boost interest rates.
Yemi Cardoso, the governor of the CBN, cited the risks of food inflation, flooding in several areas of the nation, and growing costs for oil and gasoline as justifications for tightening monetary policy even more. Before this, some market analysts predicted that inflationary patterns would probably reappear due to reasons like the naira’s depreciation and the rising cost of petroleum.
During Cowry Asset Management Limited’s recent Third Quarter Webinar Series, Johnson Chukwu, the Managing Director, voiced worries about the possibility of a resurgence of inflationary trends due to rising fuel prices, which affect the prices of products and services.
Chukwu continued, saying that there is still uncertainty about how well the CBN’s strict monetary policy would be able to control inflation, especially in light of systemic issues like poor infrastructure, expensive fuel, erratic power supplies, and administrative bottlenecks.
Dr. Muda Yusuf, the director of the Center for the Promotion of Private Enterprise, voiced concerns about the return of inflationary pressures in Nigeria during her comments on the inflation rate on Tuesday, especially after several months of relative calm.
According to Dr. Yusuf: “It is troubling that we are witnessing a resurgence of high inflationary pressures after some few months of respite despite policy measures to tame inflation, especially on the monetary side. Purchasing power had continued to plunge over the past few months. The situation had been further exacerbated by the surging petrol price.”
He ascribed the rise in inflation to elements including the escalation of fuel prices, the weakening value of the naira, and the surge in logistics and transportation expenses.
Continuing, he revealed: “The reality is that the dynamics driving inflation are yet to be effectively subdued. These factors include the depreciating exchange rate, surging fuel price, rising transportation costs, logistics and supply chain challenges, high energy costs, climate change, including resultant incidents of flooding, insecurity in farming communities, and structural bottlenecks to production.
“These are largely supply-side issues. There is also the factor of seasonality of agricultural outputs which activates seasonal price surge in some food crops. Elevated inflationary pressures escalate production costs, weaken profitability, and dampen investors’ confidence,” he added.
Dr. Yusuf encouraged the government to give industrialists preferential import taxes and to give priority to resolving important problems including foreign exchange, logistics, and power supply.
Furthermore, he emphasized the significance of subnational governments in mitigating food inflation through the enhancement of rural infrastructure to facilitate transportation and market accessibility.
In closing, he expressed optimism that the National Assembly will soon be able to grant much-needed fiscal relief through the planned economic stabilization measures. He did, however, issue a warning that controlling inflation would continue challenging in the absence of coordinated measures to address these basic issues.
