Nigerian Inflation Hits 28-Year High as Transport Costs Surge
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Nigeria's inflation rate has climbed to a more than 28-year high, exceeding expectations and prompting forecasts that the central bank will extend its tightening monetary policy into next year, reports Bloomberg.
Consumer prices surged to 34.6% in November, surpassing the previous month's 33.9%, according to data released by the National Bureau of Statistics on Monday. This outcome exceeded the median estimate of 34.3% from a Bloomberg survey of five economists.
The persistent acceleration in price growth, marking three consecutive months of increases, has been attributed to several factors. Recent floods in northern Nigeria have disrupted agricultural production, driving up prices for staples such as yams and corn. Additionally, rising gasoline costs have contributed to the inflationary pressure.
Food inflation specifically quickened to 39.9% in November, up from 39.2% in the preceding month, while core inflation, which excludes agricultural and energy components, rose to 28.75% from 28.4%.
The Central Bank of Nigeria (CBN) has aggressively raised interest rates this year, implementing a total increase of 875 basis points, in an effort to curb inflation and support the naira, which has depreciated by 41% against the dollar during this period. The MPC, however, expects inflation to begin easing in 2025 due to these measures, according to comments from Governor Olayemi Cardoso last month.
The CBN also anticipates that the deregulation of the petroleum industry and efforts to enhance security in Nigeria's northeastern food-producing regions will further alleviate price pressures in the long term.
"After the higher-than-expected rise in Nigeria's inflation, we now expect price gains to moderate from January – rather than December – at a slow pace," Bloomberg Economics Africa economist Yvonne Mhango stated in a research note. "Rate hikes will persist until the Central Bank of Nigeria achieves its goal of restoring positive real rates – likely in the third quarter of 2025. Falling inflation will give scope for policy to become less restrictive in 4Q25."