The Organised Private Sector (OPS) has expressed concern over the persistent rise in Nigeria’s inflation rate, warning that it will further increase the cost of production, raw materials, logistics, machinery, and other inputs.
On Wednesday, the National Bureau of Statistics (NBS) reported that the country’s inflation rate climbed to 34.80% in December 2024, a slight increase from the 34.60% recorded in November.
The latest Consumer Price Index (CPI) report attributed the marginal 0.20% increase to heightened demand for goods and services during the festive season.
Year-on-year, the December inflation rate represented a sharp rise of 5.87 percentage points compared to 28.92% in December 2023, underscoring ongoing upward pressure on consumer prices. This trend has been fueled by economic challenges such as currency depreciation, high energy costs, and persistent supply chain disruptions.
The report further highlighted that the average inflation rate for the 12 months ending December 2024 stood at 33.24%, up from 24.66% during the corresponding period in 2023.
The NBS stated:
“In December 2024, the headline inflation rate was 34.80% relative to November 2024’s rate of 34.60%. The marginal increase of 0.20% was driven by the December festive season’s heightened demand for goods and services.
“Year-on-year, the headline inflation rate was 5.87 percentage points higher than the 28.92% recorded in December 2023, showing a continued rise in consumer prices.”
The report revealed that food and non-alcoholic beverages were the primary drivers of inflation, contributing 18.02% to the overall figure. Other significant contributors included housing, water, electricity, gas, and other fuels (5.82%), as well as transport (2.26%). Smaller contributions came from sectors like health (1.05%) and communication (0.24%).
Urban inflation outpaced rural inflation during the period. The urban inflation rate in December 2024 was 37.29% year-on-year, a 6.30 percentage point increase from December 2023’s 31.00%. However, on a month-on-month basis, urban inflation slightly declined to 2.56% from November’s 2.77%.
Rural inflation rose to 32.47% year-on-year in December 2024, a 5.37 percentage point increase from 27.10% in December 2023. Similarly, month-on-month rural inflation saw a slight drop to 2.32% from November’s 2.51%.
Food inflation reached 39.84% year-on-year in December 2024, up from 33.93% in December 2023, driven by higher prices for staples such as yams, rice, maize, and dried fish. However, month-on-month food inflation eased to 2.66% from November’s 2.98%, influenced by price reductions in items like local beer, soft drinks, and tubers.
Core inflation, which excludes volatile agricultural produce and energy, stood at 29.28% year-on-year in December 2024, rising from 23.06% in December 2023. Transport fares, meals at local restaurants, and personal grooming services saw the sharpest price increases.
OPS Reactions
Segun Kuti-George, National Vice President of the Nigerian Association of Small-Scale Industrialists, stated that the inflation hike would escalate production costs, making locally manufactured goods less affordable for consumers.
He noted:
“The rising cost of raw materials, logistics, machinery, and other inputs means higher prices for products, reducing consumers’ purchasing power and increasing inventory levels. This creates a vicious cycle. If imported goods become cheaper than locally manufactured ones, it could lead to more business closures.”
Kuti-George also expressed concern over the ineffectiveness of interest rate hikes in curbing inflation, adding, “It seems the Nigerian economy is defying economic theories.”
Similarly, Dr. Femi Egbesola, National President of the Association of Small Business Owners of Nigeria, highlighted the detrimental effects of inflation on the private sector and the economy.
“Inflation has eroded consumers’ purchasing power, increased production costs, and reduced profitability. It has made businesses less attractive to investors, reduced exports, and stunted economic growth, leading to higher unemployment, lower national income, and increased poverty.”
He further emphasized that rising inflation has undermined savings and investments in the private sector while significantly increasing governance costs.
Olusola Obadimu, Director-General of the Nigeria Association of Chambers of Commerce, Industry, Mines, and Agriculture, attributed the inflation surge to cost-push factors and said it would be difficult to manage under current conditions.
He remarked, “Nigeria’s inflation remains high despite the Central Bank’s repeated hikes in the monetary policy rate, which were never sufficient to effectively address inflationary pressures.
