Nigeria’s annual inflation rate reached 34.8% in December, a near 29-year high. This rate is expected to decrease following a revision of the data methodology by the National Bureau of Statistics. Key factors include rising transportation costs and a slight decrease in food inflation. The central bank raised interest rates significantly last year, with expectations for easing inflation in 2025.
In December, Nigeria’s annual inflation rate surged to almost a 29-year high, recorded at 34.8%, up from 34.6% in November. This increase comes as the country is preparing to overhaul its inflation data methodology later this month, which may potentially lower the inflation readings. Economists surveyed by Bloomberg had anticipated a slightly higher inflation rate of 34.9%.
Transportation costs have been the primary factor behind the escalating prices. While food inflation decreased minimally to 39.8% from 39.9% in November, the core inflation, which excludes food and energy, increased to 29.3% in December from 28.75%. Overall, prices increased by 2.4% month-over-month.
The National Bureau of Statistics (NBS) is revising its inflation calculation methodology for the first time in 16 years, incorporating new items into the consumer price index while adopting 2024 as the new reference year. This change is expected to reduce food’s weighting in the index from 51.8% to 40.1%, thereby potentially leading to softer inflation readings. The housing and energy categories will also see a reduction.
Due to the rising inflation levels, the central bank of Nigeria raised its key interest rate significantly last year by 875 basis points. However, expectations indicate that price growth may ease in the upcoming year. The next monetary policy meeting is slated for February 18, where further decisions will be made.
The inflation data in Nigeria has been marked by significant fluctuations, with consumer prices reaching historical highs. The forthcoming overhaul of the National Bureau of Statistics’ data collection methods aims to provide a more accurate reflection of current economic conditions. This revision comes at a critical time as the country faces heightened inflation driven by increasing transportation and food costs, affecting overall economic stability.
In summary, Nigeria is experiencing a near 29-year high inflation rate in December, prompting an immediate review of its data compilation methods. With significant influences from transportation and evolving methodologies, the outlook suggests that inflation may soften in the future, contingent upon decisions by the central bank and changes in consumer price indices.
Original Source: financialpost.com
