Nigeria’s inflation charge accelerated to a greater than 6-month excessive in November on increased meals and transport costs.
Information from the Nationwide Bureau of Statistics on Monday put November’s inflation charge at 34.60%, up from 33.8% reported in October. The median estimate of 5 economists in a TechCabal survey was 34.01%.
The first drivers of this surge embrace rising meals costs, trade charge fluctuations, and will increase in transport, housing, and utility prices. November’s meals inflation quickened to 39.93% up from 39.16% recorded in October. Though Nigeria’s harvest season helped ease meals costs, flooding in key agricultural states like Borno and elevated transportation prices because of a gas hike have reversed these good points. The nation’s failure to implement a 150-day waiver on meals imports additionally quickened meals inflation.
Analysts predict that Nigeria’s inflation could peak within the coming months, intently adopted by a begin of disinflation because of the waning affect of gas subsidy elimination and naira devaluation.
“Finally, we predict the petrol value hikes are already fading, whereas the affect of the naira’s sharp devaluation earlier within the yr is fading too, such that they may drag on costs over the approaching months. Inflation because of this will peak over the following month or two, with disinflation beginning thereafter,” mentioned David Omojomolo, Africa Economist at London-based Capital Economics.
Omojomolo additionally expects the CBN to proceed with gradual rate of interest cuts from Q2 subsequent yr, predicting a 400 foundation level minimize to 23.5% by the top of 2025.
Whereas a latest surge in gas costs and floods in key agricultural areas have reversed latest good points in meals costs, analysts stay optimistic concerning the long-term outlook for Nigeria’s financial system.
“Regardless of these challenges, the present situation presents alternatives for structural reforms. Insurance policies fostering agricultural productiveness might handle meals value surges, whereas foreign exchange stabilisation efforts might restore market confidence,” mentioned Olajide Oyadeyi, an Economics Researcher at The Commonwealth Secretariat.
Strengthening fiscal self-discipline and diversifying power sources post-subsidy elimination might additionally improve financial resilience in the long run, he added.