The National Bureau of Statistics, NBS, recently, released its Consumer Price Index, CPI, of November 2023, with food inflation rising to 32.84 percent for the month.
The CPI and Inflation report indicates that Nigeria’s inflation rate climbed a record 18-year high, as headline inflation surged by 0.87 percentage points in November to hit 28.20 percent from the 27.33 percent recorded in October.
During the period, food prices were highest in Kogi, Kwara, and Rivers states, where prices rose to 41.29 percent, 40.72 percent, and 40.22 percent respectively.
Food prices were however cheapest in Bauchi (26.14 percent), Borno (27.34 percent), and Jigawa (27.63 percent).
The food inflation rate in November was 8.72 percentage points higher than what was recorded in November 2022 (24.13 percent).
The report shows that the rise in food prices was caused by increases in the prices of bread and cereals, oil and fat, potatoes, yam and other tubers, fish, fruit, meat, vegetables and coffee, tea and cocoa.
The NBS said, “On a month-on-month basis, the food inflation rate in November 2023 was 2.42 percent this was 0.51 percent higher compared to the rate recorded in October 2023 (1.91 percent).
“The average annual rate of Food inflation for the twelve-months ending November 2023 over the previous twelve-month average was 27.09 percent, which was a 6.68 percentage points increase from the average annual rate of change recorded in November 2022 (20.41 per cent).”
On a year-on-year basis, the NBS states that, “headline inflation rate was 6.73 percent points higher compared to the rate recorded in November 2022, which was 21.47 percent.
This shows that the headline inflation rate (year-on-year basis) increased in November 2023 when compared to the same month in the preceding year (i.e., November 2022).”
The global economy outlook also seem bleak, as a number of leading banks say global economic growth will slow even more in 2024 due to high interest rates, increased energy prices and a slowdown in the world’s top two economies.
They warned that the geopolitical risk and the wars in Ukraine and the Middle East could also contribute to a worsening global financial outlook, they warn.
World Economic Forum in November, quoted Reuters poll forecast that global growth could slow to 2.6 percent next year from 2.9 percent this year. “While economists generally agree the world will avoid falling into recession, they highlight the possibility of “mild recessions” in Europe and the UK.”
Similarly, the International Monetary Fund projects that baseline forecast is for global growth to slow from 3.5 percent in 2022 to 3.0 percent in 2023 and 2.9 percent in 2024, which is well below the historical (2000–19) average of 3.8 percent.
Advanced economies are expected to slow from 2.6 percent in 2022 to 1.5 percent in 2023 and 1.4 percent in 2024 as policy tightening starts to bite, while emerging market and developing economies are projected to have a modest decline in growth from 4.1 percent in 2022 to 4.0 percent in both 2023 and 2024.
However, “Global inflation is forecast to decline steadily, from 8.7 percent in 2022 to 6.9 percent in 2023 and 5.8 percent in 2024, due to tighter monetary policy aided by lower international commodity prices. Core inflation is generally projected to decline more gradually, and inflation is not expected to return to target until 2025 in most cases.”
In Nigeria, the removal of fuel subsidy and the foreign exchange rate unification policy have been blamed for the recent surge in the country’s inflation.
The World Bank, in its December update of Nigeria Development Update report, called for tighter fiscal and monetary policies, to check the twin effect of higher petroleum prices and the free fall of the naira against the US dollar, both which have combined to push inflation upwards.
Unfortunately, the latest CPI report is the sad reality for most Nigerians who can barely put food and clothes on their backs as the economy has gone from bad to worse.
Inspite of these, the Governor of the Central Bank of Nigeria, Olayemi Cardoso, is positive that the rising inflation and exchange rates will reduce drastically in 2024.
Cardoso told the National Assembly Joint Committee on Banking, Insurance and other Financial Institutions, that the outlook for the domestic economy in Nigeria for 2024 remains very positive as both the inflation and exchange rates would withstand fluctuating pressures on them and get stabilised.
He said: “The outlook for the domestic economy remains positive and expected to maintain the positive trajectory for 2024.
“Inflation pressures may persist in the short – term but is expected to decline in 2024. Exchange rate pressures are also expected to reduce significantly with the smooth functioning of foreign exchange market.”
The CBN Governor explained that the unification of the exchange rate windows in June 2023, had ushered in a new approach to the management of the exchange rate, aimed at reducing arbitrage, rent seeking behaviour and speculation in the market.
“The policy aims at creating a market where the demand and supply of foreign exchange determine the exchange rate.
“The premium has narrowed and our focus on increasing the autonomous FX supply, would lead to more stability and further narrowing of the premium.
“Total trade in the third quarter of 2023, stood at N18.804.68 billion. Exports were valued at N10.346.60 billion while total imports stood at N8.457.68 billion.
“This represents positive trade balance, which would lead to increase of the external reserves”, he said.
While many Nigerians will like to be as optimistic as the Central Bank Governor, the stark reality before us is that more than 104 million Nigerians now belong in the poverty bracket.
This, is as sluggish growth and rising inflation in the country increased poverty from 40 percent in 2018 to 46 percent in 2023, pushing an additional 24 million people below the national poverty line.
The government must therefore be seen to be doing the most to decrease inflation and poverty rates by tightening its monetary policies that will help stabilise prices.
As the year 2023 gradually comes to an end, the Tinubu led administration has the responsibility of resuscitating the economy if indeed it seeks to renew the hope of Nigerians.
The government should start by providing basic amenities like road infrastructure, power, and also provide security so farmers can return back to their farms.
