The National Bureau of Statistics (NBS) of Nigeria has recently relaunched its official website, with the release its Consumer Price Index (CPI) report for December 2024, shedding light on the country’s inflation trends after a period of downtime due to a cyberattack. This came after an announcement on X by NBS today, from the report Nigeria experienced a headline inflation rate of 34.80%, a slight increase from November’s 34.60%. This figure marks a significant year-on-year rise, as inflation had been at 28.92% in December 2023. On a month-on-month basis, the inflation rate for December was reported at 2.44%. The food inflation rate also saw a rise, standing at 39.84% year on year, indicating severe pressure on household budgets due to escalating food prices.
Headline Inflation Trends
The headline inflation rate for December 2024 was 34.80%, a marginal increase of 0.20% from November 2024’s rate of 34.60%. This slight uptick reflects increased demand for goods and services during the festive period.
On a year-on-year basis, headline inflation rose significantly by 5.87%, up from 28.92% in December 2023. This marks a persistent upward trajectory in the general price level.
Urban and Rural Inflation
Urban inflation stood at 37.29% year-on-year, representing a sharp increase of 6.30% compared to December 2023. Month-on-month, it declined slightly to 2.56%, from 2.77% in November 2024.
Rural inflation was recorded at 32.47% year-on-year, up 5.37% from December 2023. The month-on-month figure for December was 2.32%, showing a decline from November’s 2.51%.
Food Inflation
Food inflation surged to 39.84% year-on-year, driven by significant price increases in staples such as yam, maize, rice, and dried fish. The festive season amplified demand for these items, exacerbating price hikes.
Month-on-month food inflation eased slightly to 2.66%, down from 2.98% in November 2024, reflecting some moderation in the pace of price increases.
Core Inflation (Excluding Farm Produce and Energy)
Core inflation rose to 29.28% year-on-year, up from 23.06% in December 2023. Key contributors included higher costs for transportation, dining, and personal care services.
Month-on-month, core inflation increased by 0.41%, reaching 2.24% in December 2024.
State-Level Disparities
Bauchi recorded the highest year-on-year headline inflation at 44.06%, followed by Sokoto (42.43%) and Kebbi (41.47%).
Katsina (28.33%) and Delta (29.23%) reported the lowest inflation rates, highlighting significant regional variations.
Sokoto’s food inflation was the highest at 57.47%, while Ogun had the lowest at 34.24%.
Twelve-Month Averages
The average inflation rate for the twelve months ending December 2024 was 33.24%, a sharp rise from 24.66% during the same period in 2023. Food inflation followed a similar trend, with a twelve-month average of 39.12%, up from 27.96%.
Analysis of the CPI Methodology
The computation of Nigeria’s Consumer Price Index (CPI) involves a rigorous and detailed methodology designed to capture the average changes in the prices of goods and services consumed by households. Below is an analysis of the methodology as outlined in the report
The CPI is based on price data collected monthly from 10,534 informants spread across the country.
Prices are gathered for 740 goods and services across both urban and rural areas in each state, ensuring a comprehensive representation of the economy.
The CPI utilizes a “market basket” of goods and services, representing the typical consumption patterns of Nigerian households. This basket is updated periodically to reflect changing consumer preferences.
Weights for different items are derived from the Nigeria Living Standard Survey (NLSS) and revalued to align with the base period of November 2009.
The Laspeyres formula is employed to calculate the aggregated index. This involves multiplying the relative price of each item by its weight and dividing by the sum of the weights, then multiplying by 100 to derive the index.
Separate indices are computed for urban and rural areas and combined using population ratios of 0.455 (urban) and 0.545 (rural).
Classification System
Items are grouped into 85 classes, 48 groups, and 12 divisions based on their consumption purposes, following the Classification of Individual Consumption by Purpose (COICOP).
The methodology accounts for variations in consumption patterns across states and locations, though interstate comparisons of prices are not advised due to differing market baskets.
The CPI also includes a sub-index for imported food, which helps isolate the impact of global price changes.
This robust methodology ensures that the CPI provides an accurate reflection of price dynamics in the Nigerian economy. However, its reliance on historical weights and challenges in data collection, especially in insecure regions, may introduce minor biases or underrepresent certain trends.
Economic Implications
The rise in inflation, particularly food inflation, suggests systemic vulnerabilities in Nigeria’s supply chains. High dependency on imports for essential goods has exacerbated price pressures, especially with currency devaluation and global supply chain disruptions. The impact of rising food prices is particularly significant, as it affects the most vulnerable populations, pushing more households below the poverty line.
The stark differences in inflation rates across states underscore the uneven economic realities in Nigeria. States like Bauchi and Sokoto, which rely heavily on agriculture, face acute price pressures due to poor infrastructure, insecurity, and climate-related challenges affecting production.
The marginal month-on-month increase in headline inflation during December is tied to seasonal demand spikes. However, the slower pace of price increases compared to November may indicate temporary stabilization in some sectors, possibly due to government interventions or market corrections.
The sharp increase in core inflation highlights structural issues within the economy. Rising costs in transportation and personal services point to the cascading effects of higher energy prices and inefficiencies in logistics and service delivery.
Broader Economic Impact
High inflation erodes purchasing power, dampens consumer confidence, and increases the cost of living, disproportionately affecting low-income households. For businesses, rising costs may squeeze profit margins, deter investment, and exacerbate unemployment.
In summary, the December 2024 CPI report is a clarion call for action. Addressing Nigeria’s inflation challenge requires a multifaceted approach that combines short-term stabilization measures with long-term structural reforms. As the country enters 2025, policymakers must prioritize economic resilience to ensure sustainable growth and improved living standards for all Nigerians.