Prices of goods and services moderated slightly in December 2022 despite the usual Christmas hike in price expected to bolster Nigeria’s headline inflation.
Consumer Price Index, which measures the inflation rate in an economy, grew at 21.34% in the month of December 2022, 0.13% below the 21.47% recorded in the month of November 2022, the National Bureau of Statistics (NBS) reported.
On a yearly basis, the inflation rate was 5.72% higher when compared to the 15.63% recorded in December 2021. On a monthly basis, inflation expanded by 1.71%, 0.32% higher than the 1.39% filed in November 2022.
The increase in monthly inflation figure was due to the sharp increase in demand usually experienced during the festive season, the NBS stated.
Also, the increase in the cost of production like an increase in energy cost, transportation cost, exchange rate depreciation, etc are some of the factors highlighted in the report.
However, a careful breakdown of the report in relation to other key fundamental factors by Investors King pointed to a dwindling household income and weak earnings. Headline inflation usually ticks higher in December due to holiday shopping but weak earnings amid low new job creation, a 33.3% unemployment rate and a 500 basis points increase in interest rate have impacted consumer spending and retail sales in general.
Also, the uncertainty surrounding the new naira notes and withdrawal restrictions ahead of the 2023 election is partly responsible for the slight moderation in headline inflation.
Nigeria’s Food Inflation
Food inflation continues to increase in the month under review, rising by 23.75% year on year when compared to 17.37% reported in December 2021.
According to the report, the increase in food inflation was caused by increases in prices of Bread and cereals, Oil and fat, Potatoes, Yam and other tubers, Fish, Food Products, etc.
On a monthly basis, food inflation grew by 1.89%, this was 0.49% higher compared to the rate recorded in November 2022 (1.40%). This increase was attributed to increase in prices of some food items like Oil and fat, Fish, Potatoes & Tubers, Bread & Cereals, and Fruits etc.