Nigeria’s inflation rate surged to 34.80% in December 2024, a marginal increase from November’s 34.60%, according to the National Bureau of Statistics (NBS). The 0.20% rise is attributed to heightened demand during the festive season. Compared to December 2023’s rate of 28.92%, the increase underscores persistent economic challenges like currency depreciation, high energy costs, and supply chain disruptions. Food prices remain the biggest driver, with staples like rice and yams significantly contributing to the 39.84% food inflation rate.
The Organised Private Sector (OPS) has raised concerns about the inflation’s impact on production costs, consumer purchasing power, and local business competitiveness. Rising costs for raw materials, logistics, and machinery are creating a vicious cycle of higher product prices and reduced demand. Industry leaders warn that this could lead to increased reliance on cheaper imported goods, business closures, and reduced profitability. Additionally, urban areas face a higher inflation rate of 37.29% compared to rural areas at 32.47%, highlighting disparities in the economic burden.
Economic experts stress the need for targeted measures to curb inflation, as traditional monetary policy interventions like interest rate hikes have proven ineffective. Recommendations include reducing public sector debt, moderating fiscal deficits, and boosting local business competitiveness. Key reforms, such as improving infrastructure, fostering startups, and enhancing ease of doing business, are seen as critical to driving sustainable growth. Despite current challenges, there is cautious optimism for 2025, driven by potential stability in exchange rates and a focus on structural economic adjustments.