Inflation Maintains Upward Trajectory, Increases to 34.60% Amid Higher Food, Commodities, Energy Prices

•Severe in Bauchi, Kebbi, Anambra, others   

•LCCI tells businesses to ready for tense climate in 2025

James Emejo in Abuja and Dike Onwuamaeze  in Lagos 

The Consumer Price Index (CPI), which measures the rate of change in prices of goods and commodities increased to 34.60 per cent in November compared to 33.88 per cent in October, the National Bureau of Statistics (NBS) said yesterday.

NBS attributed the 0.72 per cent rise in headline inflation to increases in food and commodity prices, including energy.

The figures came as the Lagos Chamber of Commerce and Industry (LCCI) warned businesses to prepare for a tense business environment in the new year.

Reacting to the November inflation report, Director General of LCCI, Dr. ChinyereAlmona, in a statement, said the persistent rise in the headline index, which reached a 28-year high, had continued to fuel a tense business environment as elevated prices constrained various business operations. 

According to the CPI report for the period under review, year-on-year, inflation rose by 6.40 per cent compared to 28.20 per cent in November 2023.

Food inflation rate increased by 

7.08 per cent, year on year, to 39.93 per cent in November, compared to 32.84 per cent in the corresponding month of 2023.

Year on year, the uptick in the food index was blamed on increases in prices of yam, water yam, coco yam, (potatoes, yam and other tubers class), guinea corn, maize grains, rice (bread and cereals class), beer, pinto (tobacco class), and palm oil, vegetable oil (oil and fats class).

Month-on-month, food inflation stood at 2.98 per cent compared to 2.94 per cent in October.

However, core inflation, which excludes the prices of volatile agricultural produces and energy, stood at 28.75 per cent in November compared to 22.38 per cent in same period of 2023. 

The core index rose due to increases in taxi journey per drop, bus journey intercity, journey by motorcycle, rents, meal at local restaurants, accommodation service class, and hair cut service, and women’s hairdressing, (hairdressing salons and personal grooming establishments class).

Month-on-month, core Inflation stood at 1.83 per cent in November compared to 2.14 per cent in October.

Year-on-year, urban inflation increased to 37.10 per cent in November compared to 30.21 per cent in the corresponding month of 2023. Month-on-month, the index also rose to 2.77 per cent, compared to 2.75 per cent in October.

Similarly, rural inflation increased to 32.27 per cent, year-on-year, compared to the 26.43 per cent in November 2023. The index increased to 2.51 per cent month-on-month compared to 2.53 per cent last month.

At the state level, all items inflation, year-on-year was highest in Bauchi (46.21 per cent), Kebbi (42.41 per cent), Anambra (40.48 per cent), while Delta (27.47 per cent), Benue (28.98 per cent), and Katsina (29.57 per cent) recorded the lowest price rise movement.

Month-on-Month, however, the highest increases were recorded in Yobe (5.14 per cent), Kebbi (5.10 per cent), Kano (4.88 per cent), while Adamawa (0.95 per cent), Osun (1.12 per cent), and Kogi (1.29 per cent) recorded the slowest rise in inflation rate.

Year-on-year, food inflation was highest in Sokoto (51.30 per cent), Yobe (49.69 pet cent), Edo (47.77 per cent), while Kwara (31.39 per cent), Kogi (32.95 per cent), and Rivers (33.27 per cent) recorded the slowest rise in food prices.

Month-on-month, however, food inflation was highest in Yobe (6.52 per cent), Kano (5.95 per cent), and Kebbi (5.68 per cent) while Borno (0.76 per cent), Adamawa (0.90 per cent), and Kogi (1.21 per cent) recorded the slowest rise.

Almona stated, “The LCCI is particularly concerned because, with the persistent and unabated rise in inflation, businesses should prepare for more stress from the burden of higher interest rates as we enter the new year. 

“With the raging inflation rate, the unsuccessful attempt of the central bank to reduce the currency in circulation, and approaching a high-spending festive period, we are set to contend with even higher interest rates as the expected outcome from the next decisions by the CBN Monetary Policy Committee (MPC).”

She pointed out that high inflation rate had far-reaching implications for business operators.

Almona said, “One of the primary effects is reduced consumer spending. High food and core inflation erode disposable income, reducing demand for non-essential goods and services. 

“Businesses also face increased business costs, as rising transportation, rent, and energy costs elevate production expenses, shrinking profit margins. 

“Moreover, the uncertain macroeconomic environment weakens the investment climate, deterring both local and foreign investments. Persistent high inflation further threatens economic growth by diminishing the competitiveness of domestic industries and stifling expansion.”

The LCCI boss added that while businesses were confronted with a weak impact of interest rates on attempts to curb inflation, there was hope for a better performance of the reform measures implemented to boost production. 

She said, “Hopefully, we may see more of the impact of these measures on fundamental indicators like inflation, interest rates, and exchange rates. 

“A coordinated effort is required to drive oil production to earn more FOREX, which is needed to defend Naira in the short term.”

The chamber also said new investments recently entering the oil fields should be supported with a sound regulatory environment to sustain and attract more. 

LCCI also stated that Nigeria’s negative capital importation at $1.25 billion during the third quarter of 2024 compared with $2.60 billion recorded in the preceding second quarter of the year testified that the country was unattractive for investors. 

Almona stated, “Foreign Direct Investment, the most critical investment that shows long-term investor confidence, accounted for only $103.82 million, or 8.29 per cent 

“We believe the ongoing reforms have the potential to pull through critical deliverables for the economy to return to a growth path and achieve positive levels of the critical economic indicators if sustained.”