Nigeria’s inflation hits record high of 29.90% on naira weakness

Nigeria’s annual inflation rate reached 29.90 percent in January, the country’s statistics agency reported today as the naira continues to weaken.

The Consumer Price Index report released by the NBS showed that prices rose by 0.98 percent to 29.90percent in January 2024, compared with 28.92 percent in December.

“On a year-on-year basis, the headline inflation rate was 8.08 percent higher compared to the rate recorded in January 2023, which was 21.82 percent,” the report said.

This exceeds the Financial Derivatives Company projections that the headline inflation is likely to spike further to 29.73 percent.

it will be the thirteenth consecutive monthly increase and a record high

“The foremost inflation culprit in Nigeria today is the weakened currency. In January alone, the naira lost 21 percent, touching a record low of N1,530/$. This is largely because of the lingering disequilibrium in the forex market as dollar demand continues to outpace supply.,” the report said.

The FDC report mentioned that the persistent currency depreciation has led to increased costs of imported goods such as wheat, subsequently pushing up the prices of wheat-related products like noodles, semovita, and bread by 20.4 percent, 35.8 percent and 14.3 percent

, respectively.

They also revealed that food inflation, which constitutes 50 percent of the inflation rate, rose to 35.41 percent in January from 33.93 percent in December.

The rise in the Food inflation on a Month-on-Month basis was caused by a rise in the rate of increase in the average prices of Potatoes, Yam & Other Tubers, Bread and Cereals, Fish, Meat, To- bacco, and Vegetable.

A breakdown of the NBS’ latest consumer price index report shows that food and non-alcoholic beverages contributed the most (15.49 percent) to the increase in the headline index, followed by housing water, electricity, gas, and other fuel (5.00 percent), clothing and footwear (2.29 percent), transport (1.95 percent), furnishings and household equipment and maintenance (1.50 percent) and education (1.18 percent).

Others are health (0.90 percent), miscellaneous goods and services (0.50 percent), restaurants and hotels (0.36 percent), alcoholic beverages, tobacco and kola (0.33 percent), recreation and culture (0.21), and communication (0.20 percent).

Furthermore, On a year-on-year basis, in January 2024, the Urban inflation rate was 31.95 percent, this was 9.40 percent points higher compared to the 22.55 percent recorded in January 2023.

While the Rural inflation rate in January 2024 was 28.10 percent on a year-on-year basis; this was 6.97 percent higher compared to the 21.13 percent recorded in January 2023. On a month-on-month basis, the Rural inflation rate in January 2024 was 2.57 percent , up by 0.40 percent compared to December 2023.

Core inflation, which excludes the prices of volatile agricultural produces and energy stood Core inflation, which excludes the prices of volatile agricultural produces and energy stood at 23.59 percent in January 2024 on a year-on- year, up by 4.71 percent from 18.88 percent recorded in January 2023.

The highest increases were recorded in prices of Passenger Transport by Road, Medical Services, Passenger Transport by Air, Actual and Imputed Rentals for Housing, Pharmaceutical products, Accommodation services, etc.

Except for a brief pause in Dec 2022, Nigeria’s inflation reading has steadily increased since January 2023, a twelve -month consecutive high.