The headline inflation rate in Nigeria experienced a slight increase, reaching 34.80% in December 2024, as reported by the National Bureau of Statistics.
This marks a marginal rise of 0.20% from November 2024’s rate of 34.60%, primarily driven by the increased demand for goods and services during the festive season.
In December 2024, the headline inflation rate of 34.80% was 5.87% higher than the rate recorded in December 2023, which stood at 28.92%.
This year-on-year increase indicates a significant rise in the cost of living compared to the same month in the previous year.
On a month-on-month basis, the headline inflation rate in December 2024 was 2.44%, slightly lower by 0.20% compared to the rate recorded in November 2024, which was 2.64%. This indicates a slight deceleration in the rate of price increases from November to December 2024.
In November 2024, the headline inflation rate was recorded at 34.60%, showing an increase of 0.72% from October 2024’s rate of 33.88%. On a year-on-year basis, the headline inflation rate for November 2024 was 6.40% higher than the rate in November 2023, which was 28.20%. Additionally, the month-on-month inflation rate for November 2024 was 2.638%, marginally lower by 0.002% compared to October 2024’s rate of 2.640%.
Consumer Price Index
The Consumer Price Index (CPI) is a vital statistical measure that tracks the average change over time in the prices of goods and services consumed by people for everyday living. The construction of the CPI involves combining economic theory, sampling, and other statistical techniques using data from various surveys to create a weighted measure of average price changes in the Nigerian economy. This process requires the expertise of economists, statisticians, computer scientists, data collectors, and other professionals.
- Central to the construction of the CPI is the selection of the market basket of goods and services. Each month, 10,534 informants spread across Nigeria provide price data for the computation of the CPI. The market basket currently includes 740 regularly priced goods and services.
- The initial step in calculating the CPI involves collecting prices for each item from outlets in both rural and urban sectors across the states. These prices are then averaged per item per sector.
The next step is to use the average prices to calculate the basic index for each commodity by comparing the current year’s price with a base year’s price to obtain a relative price. The Laspeyres formula is then used to compute an aggregated index for each class of commodities.
What you should know
- This involves dividing the sum of the product of weights (derived from the expenditure survey) and relative prices for each item by the sum of the weights of the items in that class, and multiplying the result by 100 to get the required index number.
- This index number is categorized according to urban and rural sectors for each of the 36 states and the FCT. The survey methodology generates 3,774 all-items indices for all states and the FCT.
- The revised CPI is based on the Nigeria Living Standard Survey (NLSS) 2003/2004, with consumption expenditure data re-valued to November 2009. The new sub-index, Imported Food Index, is also available in the revised CPI.
The significance of these figures lies in their impact on the Nigerian economy and the cost of living for its citizens. Rising inflation rates can erode purchasing power, making it more difficult for individuals and households to afford everyday goods and services.
The continuous monitoring of these rates is essential for policymakers to implement measures that can help stabilize the economy and mitigate the adverse effects of inflation.
