Nigeria’s inflation rate saw a notable increase in September 2024, reaching 32.70 percent, a rise from 32.15 percent in August. According to the National Bureau of Statistics (NBS), this uptick comes after two months of declining inflation rates in July and August. Year-on-year, the inflation rate has surged by 5.98 percentage points compared to September 2023, when it was recorded at 26.72 percent. On a month-on-month basis, the inflation rate also experienced an increase of 2.52 percent in September, surpassing the 2.22 percent recorded in the previous month. These figures reflect the ongoing price pressures across Nigeria, exacerbated by external factors, particularly the significant rise in fuel prices.
The World Bank anticipated that inflation rates in Nigeria would continue to escalate, attributing this partly to a substantial hike in gasoline prices. In May 2023, the government implemented a market-based pricing model that tripled gasoline prices, which has since led to an additional 40-45 percent increase in fuel costs in September 2024. This dramatic rise in fuel prices is expected to have broader implications for transportation and production costs, resulting in increased prices for goods and services across various sectors. This inflationary trend, which began escalating earlier in the year, is particularly influenced by fuel costs and the subsequent effects on the economy.
Food inflation remains a critical driver of the overall inflation rate, climbing to 37.77 percent in September 2024 from 30.64 percent the previous year. Rising prices for staples like rice, maize, beans, and yams significantly contributed to this jump in food inflation. Month-on-month, food inflation increased to 2.64 percent, up from 2.37 percent in August. The disparity in inflation rates between urban and rural areas was evident, with urban inflation reaching 35.13 percent compared to 30.49 percent in rural regions. This divergence highlights the varying impacts of inflation on communities, with urban centers experiencing sharper price increases.
A state-level examination revealed stark variations in inflation rates, with Bauchi recording the highest at 44.83 percent, followed closely by Sokoto and Jigawa at 38.74 percent and 38.39 percent, respectively. In contrast, Delta, Benue, and Katsina exhibited significantly lower inflation figures. Additionally, core inflation, which excludes volatile items such as food and energy, rose to 27.43 percent in September 2024, influenced by rising costs in housing, transport, and medical services. The upward trend in both headline and core inflation underscores ongoing pressure on consumers and businesses alike.
In response to this inflationary crisis, the Central Bank of Nigeria (CBN) has taken proactive measures, raising the benchmark interest rate to 27.25 percent, a shift that surprised many financial analysts. The increase, a 50 basis point rise from the rate set in July, was motivated by concerns over food inflation, surging energy prices, and the depreciation of the naira. Despite expectations that the CBN might maintain or reduce rates following previous declines in inflation, the current predicament regarding price stability necessitated a more aggressive approach. Experts have expressed skepticism about the effectiveness of tighter monetary policies amid Nigeria’s deeper structural issues like inadequate infrastructure and high logistic costs.
Economic experts have voiced worries about the persistent inflationary pressures despite temporary relief experienced in prior months. Dr. Muda Yusuf, a notable economist, pointed to several underlying factors sustaining the inflation rise: increasing transportation costs, high fuel prices, and climatic events affecting agriculture. He emphasized that these persistent supply-side challenges, along with currency depreciation, undermine profit margins and investor confidence. Yusuf urged the government to consider critical interventions such as concessional import duties for industrialists to alleviate some pressures and to focus on enhancing rural infrastructure in addressing food inflation. Without addressing these fundamental issues, tackling inflation effectively remains a substantial challenge for Nigeria’s economy.
Ultimately, Nigeria’s inflation scenario underscores the complexities of managing economic stability in the face of interlinked domestic and global pressures. As inflation escalates, the challenge of preserving purchasing power while controlling costs for goods and services becomes increasingly critical. Policymakers must adopt comprehensive strategies that not only focus on monetary policy adjustments but also tackle the broader impediments to economic growth, such as infrastructure deficits and logistical inefficiencies. The dialogue around Nigeria’s economic stabilization measures and fiscal policies remains crucial as the country seeks to navigate through these turbulent financial waters, with the hope that interventions proposed in the National Assembly will bring about requisite changes for sustainable economic recovery.
