After declining steadily in July and August, Nigeria’s headline inflation rate increased to 32.70 percent in September 2024.

This was in accordance with the National Bureau of Statistics’ most recent Consumer Price Index data.

In September 2024, the World Bank predicted that Nigeria’s inflation rates would continue to grow, primarily due to a notable increase in the cost of gasoline.

The most recent inflation rate, which reflects continuous pricing pressures nationwide, is a little increase of 0.55% from the August 2024 rate of 32.15%.

Compared to the 26.72 percent recorded in September 2023, inflation has increased by 5.98 percentage points year over year.

The report read, “In September 2024, the Headline inflation rate was 32.70 per cent relative to the August 2024 headline inflation rate of 32.15 per cent. Looking at the movement, the September 2024 Headline inflation rate showed an increase of 0.55 per cent compared to the August 2024 Headline inflation rate.

“On a year-on-year basis, the headline inflation rate was 5.98 per cent points higher compared to the rate recorded in September 2023 (26.72 per cent). This shows that the Headline inflation rate (year-on-year basis) increased in September 2024 when compared to the same month in the preceding year (i.e., September 2023).

“Furthermore, on a month-on-month basis, the Headline inflation rate in September 2024 was 2.52 per cent, which was 0.30 per cent higher than the rate recorded in August 2024 (2.22 per cent). This means that in September 2024, the rate of increase in the average price level is higher than the rate of increase in the average price level in August 2024.”

According to the World Bank’s Africa’s Pulse study, which was made public on Monday, a huge increase in gasoline prices will be the primary driver of Nigeria’s further inflation rate increase in September 2024.

According to the analysis, gasoline prices tripled in May 2023 as a result of the government’s decision to adopt market-based pricing, and in September 2024, they increased by an additional 40–45%.

With manufacturing and transportation costs skyrocketing, this development is predicted to worsen inflationary pressures and raise the cost of goods and services nationwide.

This surge in inflation is part of a pattern that started in June 2024, when headline inflation peaked, and was mostly driven by rising gasoline prices and the ensuing increases in production and transportation expenses.

Prices for goods and services have increased nationwide as a result of the increased cost of petroleum, which has affected many different industries.

The report read, “While the inflationary effects of a weakened naira in the first months of this year and the removal of the gasoline subsidy in the second half of 2023 appeared to be gradually subsiding, a further increase in gasoline prices by 40-45 percent in September may reverse the disinflationary trend. The consolidation of macroeconomic reforms should support higher growth in the country in 2025.”

According to the NBS report, food costs continue to be a major contributor to inflation, as seen by the food inflation rate rising to 37.77 percent in September 2024—a significant increase of 7.13 percent from the 30.64 percent reported during the same period the previous year.

Price increases for basics including rice, maize, beans, and yams are mostly to blame for the rise in food inflation. The food inflation rate also rose month over month, from 2.37 percent in August 2024 to 2.64 percent in September 2024.

Urban areas experience higher rates of inflation than rural ones; in September 2024, urban inflation increased to 35.13 percent from 28.68 percent the year before. The rate of inflation in rural regions increased from 24.94 percent in September 2023 to 30.49 percent. Urban inflation was 2.67 percent month over month, while rural inflation was 2.39 percent.

With an annual inflation rate of 44.83 percent, Bauchi had the highest rate among the states, followed by Sokoto (38.74 percent) and Jigawa (38.39 percent). On the other hand, the smallest rate of inflation growth was seen in Delta (26.35 percent), Benue (26.90 percent), and Katsina (27.71 percent). Sokoto experienced the biggest gain, at 4.63 percent, month over month, followed by Taraba (4.07 percent) and Anambra (3.74 percent), both of which showed notable increases.

Core inflation, which does not include volatile energy and agricultural product prices, increased by 5.59 percent to 27.43 percent in September 2024 from 21.84 percent in September 2023. Significant price increases were noted for medical services, transportation, and rental housing.

A decline in food prices after Nigeria’s harvest season caused a subsequent decline in inflation, which was followed by a subsequent increase.

Last month, the Central Bank of Nigeria’s Monetary Policy Committee decided to raise the monetary policy rate—which serves as a gauge of the benchmark interest rate—to 27.25 percent.

The financial markets were taken aback by this new rate, which was 50 basis points higher than the 26.75% rate that the apex bank had previously declared in July 2024.

After two months of falling headline inflation, financial experts had predicted that the CBN would either keep or reduce interest rates.

The CBN claims that recent economic developments pertaining to inflation and the stability of the foreign exchange market served as the basis for the decision to hike interest rates.

Yemi Cardoso, the governor of the CBN, cited the dangers of food inflation, flooding in several regions of the nation, and rising energy and gasoline costs as justifications for implementing additional monetary policy tightening.

Earlier, several market analysts predicted that inflationary patterns will probably resurface due to reasons including the depreciation of the naira and the price of petrol.

During the company’s recent Third Quarter Webinar Series, Johnson Chukwu, Managing Director of Cowry Asset Management Limited, voiced concerns that the inflationary tendency would resurface as a result of rising gasoline prices, which affect the services of goods and services.

Chukwu continued by saying it is still unclear if the CBN’s strict monetary policy will be successful in reducing inflation, especially in view of structural issues including poor infrastructure, expensive gasoline, unstable electricity supplies, and logistical bottlenecks.

The director of the Centre for the Promotion of Private Enterprise, Dr. Muda Yusuf, commented on Tuesday’s inflation statistic and voiced concerns about the return of inflationary pressures in Nigeria, especially following months of relative calm.

“Despite policy measures to tame inflation, particularly on the monetary side, it is troubling that we are witnessing a resurgence of high inflationary pressures after some months of respite,” he said. Over the previous few months, purchasing power had kept declining. The problem was made worse by the rising cost of gasoline.

He blamed the depreciation of the naira, the growing cost of gasoline, and the soaring expenses of logistics and transportation for the spike in inflation.

He noted, “the reality is that the dynamics driving inflation are yet to be effectively subdued. These factors include the depreciating exchange rate, surging fuel price, rising transportation costs, logistics and supply chain challenges, high energy cost, climate change including resultant incidents of flooding,  insecurity in farming communities and structural bottlenecks to production.

“These are largely supply-side issues. There is also the factor of seasonality of agricultural outputs which activates seasonal price surge in some food crops. Elevated inflationary pressures escalate production costs, weakens profitability, and dampens investors’ confidence.”

Yusuf pleaded with the government to give industrialists preferential import taxes and give priority to resolving urgent problems including foreign exchange, logistics, and power supply.

Additionally, he emphasized how crucial it is for subnational governments to handle food inflation by enhancing rural infrastructure to facilitate market access and transportation.

He ended by saying that he hoped the National Assembly’s current proposals for economic stabilization measures will offer much-needed fiscal relief.

But he cautioned that controlling inflation would continue to be challenging in the absence of coordinated measures to address these underlying issues.