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Nigeria’s January 2024 Inflation Blues: Defying Gravity

When Isaac Newton thought of the laws of gravity, he did not have Nigeria’s Inflation rate in mind, he was immersed in other less uncertain phenomena. However, Nigeria’s inflation is a peculiar creature. Despite sustained monetary tightening that has seen the monetary policy rate (MPR) rise from 12.5% in 2021 to 19.75% in 2023, the pace of average price increases has grown unabated. According to an economist, ‘if anybody wanted proof that inflation may not always and everywhere be a monetary phenomenon. Nigeria provides a case in point’. The bank strategist noted, ‘I am not a fan of Keynesians, but at this point, monetarists have a hard job of proving that raising interest rates will curb Nigeria’s rising price levels. It takes more than a hammer to stop a rocket.’ 

But what happens when what goes up keeps going up? For the Nigerian economy, this is part of an impossible trinity (capital flows, independent monetary policy, and FX volatility). The economy has seen inflation rise to 29.90% in January 2024, up from 28.92% in December 2023; this appears to have mainly reflected the country’s worsening food situation, with bandit-related disruptions to agricultural supply chains and a sustained decline in the foreign exchange (FX) value of the naira despite tighter monetary policy. 

The National Bureau of Statistics (NBS) inflation report for January 2024 delivers a sharp blow to the gut of the Central Bank of Nigeria’s (NBS’s) sustained monetary targets.  The report releases a raging price bull that has seen food inflation cross to 35.41%.

Six Key Insights from the January 2024 Inflation Report

  • The inflation report marked the 13th consecutive increase in the inflation rate in Nigeria since January 2023.
  • Both Headline inflation and food inflation were highest in the southwest region of Nigeria.
  • Both headline and food inflation were lowest in the northeast region.
  • Headline inflation was lowest in Bornu state, while Bauchi state had the lowest food inflation.
  • Even though Bauchi state had the 6th highest headline inflation, it had the lowest food inflation in Nigeria in January 2024, implying that Bauchi state headline inflation is not driven mainly by food inflation.
  • Kogi state had both the highest headline inflation and the highest food inflation in January 2024.

Eight Key Highlights from the January 2024 Inflation Report

  • Headline inflation increased by 8.08% points year-on-year (year-on-year) to 29.90% in January 2024 from 21.82% points in January 2023. 
  • Headline inflation rose by 0.72% points Month-on-month (M-o-M), from 28.92% in December 2023 to 29.90% in January 2024.
  • Core inflation rose from 18.88% in January 2023 to 23.59% in January 2024.
  • Inflation remains higher in urban areas at 31.95% in January 2024 from 22.55% in January 2023 than in rural areas at 28.10% in January 2024 from 21.13% in January 2023.
  • Food inflation rose by 11.09% points to reach 35.41% in January 2024 from 24.32% recorded in January 2023. This also represents 1.48% points increase compared to the 33.93% food inflation recorded in December 2023.
  • Kogi state had the highest headline inflation growth at 35.79% in January 2024, while Borno had the lowest inflation growth at 22.57%.

Food inflation growth was highest in Kogi at 44.18% in January 2024, while Bauchi had the lowest food inflation at 28.83% in January 2024(

Inflation Across Regions 

Inflation across regions reveals that inflation continues to be higher in the southern regions of Nigeria than in the northern regions. Both headline and food inflation were highest in the southwest region but lowest in the northeast region of Nigeria. The report reveals that although food inflation increased M-o-M across all regions, headline inflation declined across all regions M-o-M. This shows that food inflation was a major contributor to the high inflation figures reported in January 2024 (see chart below).

Inflation Across States: Kogi, Lonely at the Top

The January 2024 inflation report revealed that headline and food inflation were highest in Kogi state. The 5 states with the highest headline inflation were:

  • Kogi (35.79%)
  • Oyo (34.58%)
  • Akwa Ibom (33.16%)
  • Abia (33.00%), and 
  • Rivers (32.74%) states respectively. 

The 5 states with the lowest headline inflation were:

  • Borno (22.57%)
  • Taraba (24.83%)
  • Benue (26.64%)
  • Nasarawa (26.79%) and 
  • Plateau (27.06%) states, respectively.
  • The 5 states with the highest food inflation were:
  • Kogi (44.18%)
  • Kwara (40.87%)
  • Rivers (40.08%)
  • Akwa Ibom (39.96%) and
  • Imo (39.92%) states respectively.
  • The 5 states with the least food inflation were:
  • Bauchi (28.83%)
  • Adamawa (29.80%)
  • Kano (30.08%)
  • Nasarawa (30.14%), and 
  • Plateau (30.28%) states respectively. 
  • Nigeria: Why is Inflation Rising?
  • The causes of inflation in Nigeria are multi-dimensional. According to NBS, food inflation, importation, communication, clothing, and transport, among other drivers, are the major causes of high inflation in Nigeria. Proshare analysts reveal that other major drivers of inflation’s persistence are depreciated currency, insecurity, and energy costs. These factors tend to fuel the drivers of inflation aside from being drivers of inflation themselves (see illustration below).
  • Illustration 2:
  • Analysts Closing Thoughts: Addressing the Monetary Policy Trilemma 
  • Rising inflation has left most households clutching at whatever survival mechanism can be harnessed; for some, this may have included economic straws. Many households’ survival opportunities have shrunk daily as commodity prices skyrocketed over the last twelve months. Public sector economists continue to scratch their heads as they try to sequence policy responses to reduce the severity of pain faced by households since the removal of the petrol subsidy and FX subsidy in the middle of last year.    
  • The Tinubu administration courageously introduced policies that should have been adopted and implemented earlier under an appropriate policy sequencing programme. Unfortunately, the administration decided on the right policies under the wrong sequencing arrangement, leading to an accelerated inflation rate unaccompanied by economic growth. The administration ignored the ‘Cobra effect’ or a situation where policy implementation could be worse than the problem it was designed to solve. The government also appeared oblivious to ‘Murphy’s law, which states that bad things can worsen. The outcomes can be difficult in a country with a large public trust deficit. If citizens are to buy into an agenda that may require patience, the consistent narrative should centre around public sector frugality.   Public sector cost-cutting should not be an emblem of good governance but an integral part of public accountability.
  • If the economy is to wriggle from the oppression of a high domestic inflation rate, it must choose the appropriate monetary policy targets. A survey of economists suggests that the following four policy actions are important in addressing Nigeria’s inflation rate challenge, namely:
  • Resolving the FX supply challenge by looking at the nation’s balance sheet and commercializing and financializing idle public assets
  • Create investment deal books and rooms that allow foreign investors opportunities to assess assets they can buy or invest in. The asset register is important but does not prevent the creation of a deal room with smaller deals used as sandboxes (experimental playgrounds) to assess market efficiency and effectiveness. 
  • Raise tariffs on luxury items to improve revenue and reduce demand pressures on FX. 
  • Adopt and implement a ‘buy Nigeria strategy’ to reduce FX pressure and ease the burden on domestic prices.
  • Unusual times or situations require unconventional measures. Getting FX inflows is critical to reducing domestic inflation. Surveyed economists note that Inflation is an effect and not a cause; just as high blood pressure reflects lifestyle choices, so is inflation, the effect of low productivity, inadequate FX, and internal supply chain disruptions. The inflation bogey is not a death sentence but a warning signal, but without lifestyle changes, high blood pressure leads to death and without policy changes, unaddressed inflation could lead to an economic meltdown.


Chart 1:

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