Nigeria’s inflation nears its highest since 1996: summary

What we know

• Nigeria’s inflation has reached its highest point since mid-1996, intensifying concerns about income erosion and a worsening cost-of-living crisis.
• The country's weaker currency, the naira, experiencing a second devaluation in less than a year, is a key contributor to the rising inflation, compounded by energy and logistics costs linked to infrastructure challenges.
• The cost of living crisis is further exacerbated by the escalating prices in the food and non-alcoholic beverages category, which became the primary driver of inflation in January on an annual basis.
• Specifically, food inflation surged from 33.93% in December to 35.41% in January, reflecting the challenges faced in the agricultural and food supply chains.
• Meanwhile, the government has announced plans to address outstanding debts and gas supply shortages in a bid to alleviate the power woes that have long plagued the nation's economic growth and development.
• Vice President Kashim Shettima announced this week that the Nigerian government is considering the establishment of a commodity board aimed at regulating the prices of essential goods, particularly grains.

What they said

Vice President Shettima said that the primary objective is to address soaring food costs and provide support to smallholder farmers, who play a crucial role in the nation's agricultural production. He added that this regulatory mechanism is part of the government's broader strategy to tackle inflation and ensure the sustainability of the agricultural sector. Jason Tuvey, an expert economist at London-based economics firm Capital Economics also said "We expect the central bank to finally deliver a large interest rate hike, probably in the region of 400 basis points to 22.75%, when the MPC meets towards the end of this month."