Nigeria’s headline inflation quickens to 34.80% in December 2024, puts rate hike in focus

Nigeria’s headline inflation quickened in December 2024 to 34.80% due to increased transport prices and heightened consumer spending during the holidays, according to data from the National Bureau of Statistics (NBS). The latest figures, up from 34.60% reported in November, puts another interest rate hike in focus at the next Monetary Policy Committee meeting in February. 

Food and transport costs were the major drivers of December 2024 inflation. Food inflation eased to 39.84% up from 39.93% recorded in November 2024. 

“The outlook for inflation in 2025 is tricky considering the rebasing of the inflation basket,” said Samuel Onyekanmi, an analyst at Norrenberger. Oyekanmi expects that inflation will begin moderating by the second half of the year and will slow to the region of 25% to 27% by year-end. 

The statistics agency rebased its calculation of the consumer price index (CPI) and gross domestic product (GDP). The NBS calculates inflation using a CPI basket that measures the average change in price of goods and services consumed by people daily. The NBS, which previously tracked 740 of those goods and services, increased the CPI basket to cover 960 items, with 2024 as the new benchmark year.

The addition of the new items was to reflect the current consumption patterns, Ayo Andrew Anthony, Head of Price Statistics at the NBS, said Thursday at a sensitisation workshop. New inflation figures based on the new price index will be released at the end of January 2025.

The new data may result in lower inflation because the weighting of food, which accounts for the majority of household spending and contributes more than half of the CPI basket, has been cut to 40.1% from 51.8%.

“The recent GDP rebasing and CPI reweighting are significant steps forward in capturing the true breadth of economic activity. These adjustments should enhance data accuracy and support more effective planning,” said Olajide Oyadeyi, an economist at Econoday Inc. 

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