The festive season of Christmas in 2024 found Nigerians wrestling with an unprecedented surge in transport costs, a stark reality underscored by a record-high transport inflation rate of 30.54% in November. This figure, the highest for the year, reflected a persistent upward trend that plagued the transport sector throughout 2024, consistently surpassing the inflation levels witnessed in 2023. The escalating cost of mobility burdened both individuals and businesses, casting a shadow over the holiday season. The year began with a transport inflation rate of 25.92% in January, a considerable jump from the 21.02% recorded in January 2023. While the rate experienced a period of relative stability mid-year, hovering around 25.63% in May and June, it resumed its upward trajectory, reaching 27.21% in September following a fuel price hike, and culminating in the November peak. This represented a year-on-year increase of 3.52 percentage points compared to November 2023, painting a grim picture of escalating transport expenses for the average Nigerian.
The primary driver behind this surge in transport costs was the removal of fuel subsidies, a key policy decision implemented shortly after President Bola Tinubu’s inauguration in May 2023. While the policy aimed to bolster public finances and stimulate economic growth, its immediate impact was a sharp increase in the prices of petrol and diesel, essential fuels for road and public transport. This price hike rippled through the transport sector, forcing operators to adjust their fares upwards, consequently increasing the financial burden on commuters and businesses dependent on transportation. The controversy surrounding the removal of fuel subsidies was further fueled by reports of the Nigerian National Petroleum Company Limited (NNPCL) requesting an additional subsidy refund of N1.19 trillion for July 2024, citing exchange rate differentials on Premium Motor Spirit (PMS) importation and joint venture taxes. This request highlighted the complex financial implications of the subsidy removal and raised concerns about its long-term sustainability.
Adding to the complexity of the situation were fluctuating exchange rates and the rising cost of importing PMS. These factors further strained government revenues and prompted questions about the viability of the partial subsidy framework. The depreciating naira exacerbated the issue, driving up the cost of imported spare parts and vehicles, which in turn impacted transport operators and ultimately, consumers. The festive season, with its inherent increase in travel demand, further amplified these challenges. Insufficient road infrastructure and the limited availability of alternative transport options, such as rail, contributed to inefficiencies and higher costs within the transport sector, further fueling inflationary pressures.
The inflationary trends of 2024 mirrored broader economic challenges that intensified following President Tinubu’s assumption of office. Despite campaign promises to lower petrol prices, the cost of petrol increased significantly under his administration, rising by approximately 505.71% from N175 in May 2023 to N1,060 in October 2024. This sharp increase placed further strain on already struggling Nigerians. The price of petrol was hiked multiple times during this period, adding to the economic hardship faced by the populace. Under Tinubu’s presidency, transport inflation escalated from 23.87% in May 2023 to 30.54% in November 2024, a stark increase of 6.67 percentage points in just 18 months. This period also witnessed a persistent rise in the headline inflation rate, which soared from 22.41% in May 2023 to a near three-decade high of 34.60% in November 2024.
The naira’s devaluation against the dollar, from N769 per dollar in June 2023 to an average of N1,550 per dollar in December 2024, substantially increased the cost of imported goods and services, contributing to inflationary pressures. The Central Bank of Nigeria responded with aggressive monetary tightening measures, raising interest rates by 875 basis points in 2024. However, these measures proved insufficient to curb the rising cost of living, which continued to impact households and businesses nationwide. Commuters faced escalating daily expenses that eroded their purchasing power, while businesses, particularly small and medium enterprises (SMEs), struggled with increased logistics costs, which translated into higher prices for goods and services, further contributing to the inflationary spiral.
Amidst this challenging economic landscape, a glimmer of hope emerged towards the end of the year. The NNPCL reduced its ex-depot price of petrol to N899 per litre, following a similar move by the Dangote Refinery. This price reduction, representing a 13.56% decrease, offered some relief to motorists. Industry stakeholders attributed this decrease to increased competition in the downstream sector following deregulation and expressed optimism for further price reductions in the new year. Furthermore, in a bid to alleviate the burden of transport costs during the festive period, the Federal Government implemented free train rides nationwide and a 50% reduction in interstate transport fares. This initiative, involving collaboration with key transport stakeholders, aimed to ease travel expenses for Nigerians celebrating Christmas and New Year, offering a temporary respite from the persistent economic pressures.
