Highlights

Headline Inflation sustained its upward trajectory for the fourth consecutive month on a year-on-year basis, ending 2024 at a record high. December 2024 numbers printed at 34.80%, a 20 basis-points increase from 34.60% reported in November 2024. However, on a month-on-month basis, there was a slight decline in the rate, with December’s Inflation printing at 2.44%, down from the 2.64% recorded in November 2024.

Contrary to our projections of higher Food Inflation driven by seasonal demand toward the end of the year, Food Inflation demonstrated a slight moderation both on a year-on-year and month-on-month basis. Core Inflation printed higher both on a year-on-year and a month-on-month basis.

CPI Rebasing

The Nigerian Bureau of Statistics (NBS) recently announced the rebasing of inflation indexes to better align price references and weights with current economic realities. The new base year for price references is 2024, while the weight reference period has been updated to 2023. This adjustment reflects significant economic shifts and aims to ensure inflation rates accurately capture prevailing market dynamics.

Outlook

For January 2025, we anticipate the persistent insecurity in the northern regions and elevated logistics costs driven by high fuel prices will maintain pressure on food inflation. However, the recent reweighting of the Food Index—now assigned a reduced weight in the overall inflation basket—indicates that fluctuations in food prices will have an impact on Headline Inflation.

Nonetheless, as seasonal demand from year-end festivities wanes and the Naira stabilises, we expect to observe a sub-optimal pressure on Core inflation.

Taking these factors into account, we project the Headline Inflation rate for January 2025 to print at 34.51%.

Click here “December 2024 Inflation – Festive Demands Mask Gains in Naira Appreciation” to view the full report.

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