Analysts predict that Nigeria’s headline inflation will rise to 34.91% year-on-year in December due to seasonal festive demand, poor harvests, and high energy and transport costs. Recent data from the National Bureau of Statistics (NBS) showed inflation climbing for the third consecutive month, reaching 34.60% in November, with food prices driven up by subpar harvests and core inflation impacted by naira depreciation and increased operating costs. While the ongoing festive period could bolster consumer demand, structural economic challenges, including inflation and energy expenses, are likely to hinder private sector activities.
Despite improvements in the agricultural sector, other industries remain under pressure. The Central Bank of Nigeria’s (CBN) reports reveal a contraction in private sector performance for the second month, especially in services and industrial activities, as borrowing costs and inflation persist. Analysts warn that the naira’s depreciation is affecting foreign investments, though eased import costs may offer temporary relief. Policymakers emphasize the need for diversified economic strategies, including boosting exports and foreign exchange earnings, to stabilize the currency and support long-term growth.
Higher consumer prices could increase government revenue through Value Added Tax (VAT) and FAAC distributions. However, experts argue that addressing Nigeria’s economic vulnerabilities requires sustained reforms, such as promoting infrastructural development and expanding the economy beyond its reliance on oil. They caution that the private sector will continue to face challenges from escalating costs and tight financial conditions in the near term, necessitating innovative and collaborative solutions.