In October 2024, Nigeria’s inflation rate surged to 33.88%, a significant jump from September’s 32.68 per cent, according to data released by the National Bureau of Statistics (NBS).
This marked the highest inflation level in the past two decades, intensifying pressure on households, businesses, and policymakers. The increase was driven largely by rising food and energy prices, compounded by the lingering effects of subsidy removal and currency depreciation.
Analysts point to several factors behind the sustained inflationary trend. The removal of fuel subsidies earlier in 2024 had an initial cascading impact on transportation and logistics costs, which fed into higher prices across various sectors.
Additionally, the naira’s depreciation against major currencies has made imports more expensive, exacerbating the cost of essential goods, including food and raw materials.
“Persistent exchange rate volatility is one of the central issues aggravating inflation,” noted Chike Obi, an economic analyst at Lagos-based ProInsight.
“The Central Bank’s monetary tightening has struggled to fully anchor inflation expectations amid these structural challenges.”
Food inflation, a major component of the Consumer Price Index (CPI), continued to climb, fueled by poor agricultural yields, insecurity in food-producing regions, and increased logistics costs.
The NBS report indicated that food inflation stood at 44.15 per cent, with staple items such as rice, bread, and cooking oil experiencing significant price surges.
Core inflation, which excludes volatile food and energy prices, also contributed to the overall figure, suggesting that underlying inflationary pressures remain robust.
The Central Bank of Nigeria (CBN) has implemented a series of interest rate hikes over the past year to curb inflation. However, analysts argue that monetary policy alone may not be sufficient to address Nigeria’s supply-side issues.
Financial analyst Ada Adebayo suggested that “while raising rates can temper demand-driven inflation, it does little to resolve the supply bottlenecks and import dependency that drives price increases.”
The government has also rolled out targeted subsidies for key sectors and increased social welfare spending. However, economists warn that these measures might only provide short-term relief if structural reforms are not prioritized.
Samuel Olatunji, a senior economist at Abuja-based MacroInsights, emphasized that “without bolstered domestic production and improved forex liquidity, the inflationary spiral may persist.”
Business owners have expressed concerns about the sustainability of operations amidst rising input costs. Many SMEs are grappling with shrinking profit margins, forcing some to scale back production or pass on higher costs to consumers.
Looking ahead, analysts remain cautious about the inflation outlook. With global oil prices being unpredictable and domestic energy costs remaining high, sustained inflationary pressure is likely.
Economists have called for a blend of policy interventions, including fiscal measures to stimulate local production, improved security for farming regions, and comprehensive energy reforms to stabilise costs.
“Collaborative strategies between fiscal and monetary authorities, along with public-private partnerships, will be essential to ease inflationary pressures and support economic growth in the medium term,” Adebayo remarked.