The Organised Private Sector (OPS) has raised concerns about the persistent rise in Nigeria’s inflation rate, warning that it will further increase the cost of production, raw materials, logistics, and machinery, among others.
The National Bureau of Statistics (NBS) reported on Wednesday that the inflation rate climbed to 34.80% in December 2024, slightly up from 34.60% in November. The Consumer Price Index attributed the 0.20% rise to heightened demand for goods and services during the festive season.
Year-on-year, December’s inflation rate marked a 5.87 percentage point increase from 28.92% in December 2023, underscoring sustained price pressures driven by economic challenges such as currency depreciation, high energy costs, and supply chain disruptions. The average inflation rate for the 12 months ending December 2024 stood at 33.24%, compared to 24.66% for the same period in 2023.
The NBS report highlighted food and non-alcoholic beverages as the primary drivers of inflation, contributing 18.02% to the overall figure. Housing, water, electricity, gas, and other fuels added 5.82%, while transport accounted for 2.26%. Smaller contributions came from health (1.05%) and communication (0.24%).
Urban inflation rose to 37.29% year-on-year in December, up from 31.00% in December 2023. Meanwhile, rural inflation reached 32.47%, up from 27.10%. On a month-on-month basis, urban and rural inflation rates experienced slight declines.
Food inflation surged to 39.84% year-on-year in December 2024, compared to 33.93% in December 2023, driven by increases in staples like yams, rice, maize, and dried fish. However, month-on-month food inflation eased to 2.66%, reflecting reduced prices for items like local beer, soft drinks, and tubers.
Core inflation, which excludes volatile agricultural and energy prices, stood at 29.28% year-on-year, up from 23.06% in December 2023. Transport fares, meals at restaurants, and personal grooming services recorded the sharpest price increases.
OPS Reacts
Segun Kuti-George, National Vice President of the Nigerian Association of Small-Scale Industrialists, warned that rising inflation would escalate production costs, leading to higher prices for locally manufactured goods and reduced consumer purchasing power. This could result in higher inventory levels and increased reliance on cheaper imported goods, risking local business closures.
Kuti-George also noted that despite repeated interest rate hikes aimed at curbing inflation, the rate continues to rise, suggesting that the Nigerian economy is defying conventional economic theories.
Dr Femi Egbesola, National President of the Association of Small Business Owners of Nigeria, highlighted the negative impact of inflation on the private sector and the economy, citing reduced purchasing power, increased production costs, and diminished profitability. He added that inflation has made Nigerian exports less competitive, reduced economic growth, increased unemployment, and deepened poverty.
Olusola Obadimu, Director-General of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), attributed the inflationary pressures to cost-push factors, including rising production costs. He argued that monetary policy rate hikes would not effectively address Nigeria’s inflation, as the issue stems from supply-side challenges.
Obadimu called for policies targeting input cost reductions to lower prices, improve local business competitiveness, and promote fiscal discipline. He also emphasised the need for better infrastructure to boost the ease of doing business and support startups.
Dr Muda Yusuf, Director of the Centre for Promotion of Private Enterprise, acknowledged the marginal 0.20% rise in December inflation but described the trend as troubling. He projected a more positive inflation outlook for 2025, citing potential improvements in exchange rate stability, foreign reserves, and easing geopolitical tensions.
Yusuf recommended pausing further interest rate hikes, reducing public sector debt, and reassessing revenue targets for government agencies to avoid inflationary pressures on businesses. He cautioned that excessive revenue targets could harm investments, exacerbate inflation, and hinder economic growth, advocating for balanced policies to support investment, moderate inflation, and reduce poverty.
