As experts see further pressures from festive season demand
There are indications that food inflation would exceed 40 percent mark this month as November inflation shows further rise in consumer prices.
Economy experts have cited structural constraints on food production in the northern part of the country as well as the festive season demand pressures and increased transportation activities as main drivers of current inflationary pressure.
The National Bureau of Statistics, NBS, in its Consumer Price Index, CPI, report for November 2024 released yesterday said food inflation rose by 0.77 basis point to 39.93 percent from 39.16 percent in October 2024 due to increase in the prices of yam, water yam, coco yam, guinea corn, maize grains, rice among others.
Also the report said headline inflation rate rose by 0.72 percentage point to 34.6 percent in November from 33.88 percent in October.
The Bureau stated: “In November 2024, the Headline inflation rate was 34.6 percent relative to the October 2024 headline inflation rate of 33.88 percent.
“Looking at the movement, the November 2024 Headline inflation rate showed an increase of 0.72 percentage points compared to the October 2024 Headline inflation rate.
“On a year-on-year basis, the Headline inflation rate was 6.4 percent points higher than the rate recorded in November 2023 (28.2 percent).
“This shows that the Headline inflation rate (year-on-year basis) increased in November 2024 compared to the same month in the preceding year (i.e., November 2023).
“Furthermore, on a month-on-month basis, the Headline inflation rate in November 2024 was 2.6 percent, which was 0.002 percentage points lower than the rate recorded in October 2024 (2.64 percent).
“This means that in November 2024, the rate of increase in the average price level is slightly lower than the rate of increase in the average price level in October 2024.”
On food inflation, NBS said: “The food inflation rate in November 2024 was 39.93 percent on a year-on-year basis, 7.08 percent points higher than the rate recorded in November 2023 (32.84 percent).
“The rise in Food inflation on a year-on-year basis was caused by increases in prices of the following items; yam, water yam, coco yam, etc (potatoes, yam & other tubers class), guinea corn, maize grains, rice, etc (bread and cereals class), beer, pinto (tobacco class), and palm oil, vegetable oil, etc (oil and fats class).
“On a month-on-month basis, the food inflation rate in November 2024 was 2.98 percent which shows 0.05 percentage points increase compared to the rate recorded in October 2024 (2.94 percent).”
Commenting on the development in their ‘Macroeconomic Update’, analysts at Cardinalstone Limited, a Lagos-based finance and investment firm, said: “True to our expectation, the food basket materially skewed the inflation print for November, rising by 77bps to 39.92 percent.
“This escalation was attributed to ongoing security challenges in key agricultural regions in northern states, coupled with seasonal, festive-driven demand for staple food items. Similarly, the core basket rose by 37bps to 28.75 percent year-on-year, YoY, a consequence of sustained energy prices.
“In December, we anticipate continued upward pressure on the food index due to festive demand and structural constraints on food production in the north.
“The core index is also expected to remain elevated, driven by heightened transport activities during the holiday season. “Overall, we estimate inflation to settle at 35.09 percent in December.”