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By Chinwendu Obienyi
Economic analysts have stated that they are expecting a further increase in the country’s inflation rate for November 2024, due to a range of ongoing economic pressures.
Latest inflation data from the National Bureau of Statistics (NBS) reveals a continued upward trend in consumer prices for October, marking the second consecutive month of increase after a brief two-month moderation.
This resurgence stems primarily from the sustained impact of the increase in Premium Motor Spirit (PMS) prices and food supply disruptions caused by widespread flooding. The headline inflation rate reached 33.88% year-on-year (y/y), representing a 118 basis points (bps) increase from the prior month (September: 32.70% y/y).
Breaking it further down, food inflation demonstrated persistent pressure despite the harvest season, climbing by 139bps to 39.16% y/y (September: 37.77% y/y). At the same time, core inflation reversed its September moderation, advancing by 94bps to 28.73% y/y (September: 27.43% y/y) due to the combined effect of naira depreciation and high operational costs. Similarly, on a month-on-month basis, headline inflation increased by 12bps to 2.64% m/m in (September: 2.52% m/m).
Despite the typical boost from the October harvest season, food inflation surged by 30bps to 2.94% m/m (September: 2.64% m/m), resulting in a 39.16% y/y print (September: 37.77% y/y). This trend reflects persistent structural challenges undermining the agricultural sector’s productivity.
According to economists, Key factors include widespread flooding disrupting farming activities, ongoing conflict in the Northern region limiting agricultural operations, and rising input costs constraining harvest yields below historical averages, all of which have kept agricultural food prices elevated.
Analysts at Cordros Research said, “Additionally, the persistent currency depreciation maintained upward pressure on imported food prices, while increased transportation costs – a direct consequence of higher Premium Motor Spirit (PMS) prices – inflated retail food prices across the board. To put this in perspective, October’s m/m food inflation significantly exceeded the five-year October average of 1.47%, underscoring the unusual intensity of current price pressures. Across sub-items, prices rose for Farm Produce (+20bps to 2.95% m/m) and Processed food (+33bps to 2.93% m/m), while Imported food prices saw a slight decline (-24bps to 3.37% m/m).
Typically, the main harvest period spans September through December across both the Northern and Southern regions. However, a recent report from the Farming Early Warning System Network (FEWSNET) suggests an impending deterioration in food security from November 2024 through May 2025, driven primarily by suboptimal harvest yields. This, combined with persistent naira volatility and festive-driven consumer demand, is expected to sustain price pressures on both locally produced and imported food items. As a result, we expect food inflation to print 3.04% m/m in November, leading to a further increase in the year-on-year numbers (+160bps to 40.83%)”.
