The Consumer Price Index produced by the National Bureau of Statistics indicates that in December 2023, the headline inflation rate increased to 28.92%, up from the November 2023 headline inflation rate of 28.20%. This is an increase of 0.72% points between November and December 2023. On a year-on-year basis, the headline inflation rate was 7.58% points higher than the December 2022 rate of 21.34%.

The food inflation rate for December 2023 was reported at 33.93% on a year-on-year basis, being 10.18% points higher to the rate recorded in December 2022 (23.75%). The surge in the price of food items is linked to increases in prices of bread and cereals, oil and fat, potatoes, yam and other tubers, fish, meat, fruit, milk, cheese, and egg.

Centre for Social Justice notes that rising prices is a symptom of the overall negative macroeconomic fundamentals and strong headwinds besetting the Nigerian economy. Beyond inflation, the Naira is losing value, poverty and unemployment is increasing; there have been massive factory closures, increasing insecurity and population growth figures that almost outpaced economic growth. Furthermore, the short term and medium-term impact of economic reform measures (fuel subsidy removal and exchange rate unification) have not been properly articulated. The reforms were not accompanied by an evaluation/projection of their impact on the economy as well as countervailing measures necessary to limit their harsh effects on prices and other macroeconomic indicators.  

It is therefore imperative that Nigeria’s economic managers adopt a holistic approach to improving the economy/decelerate inflation and this should include the following.

• Increased productivity especially in the tradable and export-oriented sectors (including oil and gas as well as removing export trade barriers in the agriculture sector in the short run) can shore up our foreign exchange earnings which will improve the value for the Naira against major international currencies thereby limiting import induced inflation.   

• Improving security of lives and property through the right political will that guarantee value for money in the provision of security services in Nigeria. It should be recalled that security has been given the highest budgetary allocations at the federal level in the last ten years. This will also improve agriculture’s contribution to the GDP and food production thereby limiting food inflation which has been the major driver of inflation over the last one year. Improved security will further lead to increased oil and gas production for export and local refining.

• Limit ways and means funding of the federal budget to the statutory limit of not more than 5 percent of previous years’ actual revenue in accordance with S.38 of the Central Bank of Nigeria’s Act 2007.

• Implement a Nigeria First Local Content Policy in Federal and State Public Procurement to ensure that capital budget implementation do not put undue pressure on the Naira. Rather, capital budget implementation should create jobs, enhance local productivity and grow the economy.

• Stop denying Nigerians access to their money, vis cash in banks as a means of mopping up what is considered excess liquidity. This is a fundamentally flawed measure for the reduction of inflation.