Inflation will start moderating from January — Analysts

LAGOS – Nigeria’s inflation rate will begin to taper from January 2025, analysts at Financial Derivative Company (FDC) said on Thursday.

This is following their ap­praisal of the December 2024 inflation figures released by the National Bureau of Sta­tistics (NBS) on Wednesday where headline inflation rose for the fourth straight month in December 2024, advancing to 34.80 percent.

The analysts said, “Infla­tion is expected to moderate in January as the Central Bank of Nigeria (CBN) is un­likely to adopt an aggressive policy stance in its upcoming meeting; in­stead, it is expected to close­ly monitor inflation trends before determining its next course of action”.

The NBS stated in its re­port on Wednesday that the uptick in December was due to increased demand associ­ated with the festive period as food and non-alcoholic bever­ages contributed the most to price pressures.

Nigeria’s inflation rate be­gan to rise in September 2024 when it rose to 32.7 percent from 32.15 percent in August.

The following month, Ni­geria’s inflation rate climbed to 33.8 percent and rose fur­ther to 34.6 percent in No­vember.

The report added that the increase indicates a signifi­cant rise in the cost of living compared to the same month in the previous year.

The position of the FDC on the inflation seems to be a consensus as Stephen Iloba, an economist, said the like­lihood of the inflationary trend relaxing in January is higher than the possibility of another rise.

He said, “I think the an­alysts at FDC have enough information at their dispos­al before making the con­clusion. I am aligning with them.

“If you look closely, the impact of the drop in petrol prices across the country in December and the continued stable price will have a positive effect on food inflation which is an integral part of measure­ment of core inflation”.

As reported by NBS, on a month-on-month basis, the headline inflation rate in December 2024 was 2.44 percent, slightly lower by 0.20 percent compared to the rate recorded in November 2024, which was 2.64 percent. This indicates a slight decel­eration in the rate of price increases from November to December 2024.

In November 2024, the headline inflation rate was recorded at 34.60 percent, showing an increase of 0.72 percent from October 2024’s rate of 33.88 percent. On a year-on-year basis, the headline inflation rate for November 2024 was 6.40 per­cent higher than the rate in November 2023, which was 28.20 percent.

Additionally, the month-on-month inflation rate for November 2024 was 2.638 percent, marginally lower by 0.002 percent compared to October 2024’s rate of 2.640 percent.

According to the NBS re­port, the average inflation rate for the 12 months end­ing December 2024 stood at 33.24 percent, up from 24.66 percent recorded during the same period in 2023.