• Food inflation eased slightly by 8bps to 39.84% y/y from 39.93 in November ’24, marking the first decline since August ’24. On a month-month basis, moderated by 32bps to 2.66% from 2.98% in November ’24. Price increases were recorded for staple foods due to supply shortages driven by insecurity in many food producing states.
• Imported food inflation stood at 42.29% y/y in December ’24 down from the 41.29% in November ’24. The passthrough effect of naira depreciation on the cost of imported raw materials remains visible as the Naira depreciated against the US Dollar by 41.03% y/y or N630 to close at N1,538.25/US$ in December ’24.
• Core inflation (all items less farm produce and energy) increased by 53bps to 29.28% y/y, intensified by increased activities in the transportation sector (33.77% y/y vs 30.54% y/y) due to increase in traffic during festive period. Inflationary pressures were observed in the restaurants & hotels services segment, which climbed to 35.48% y/y vs 34.84% y/y.
• Based on headline inflation by state the NBS data shows that Bauchi state recorded the highest inflation level at 44.06% y/y during the period, while Katsina state recorded the lowest at 28.33% y/y. It is worth noting that household baskets differ across states, reflecting the diverse consumption patterns.
• The Monetary Policy Committee (MPC) has postponed its meeting to February 17th and 18th to further monitor the inflation trend and evaluate the implication of the inflation rebasing exercise. We anticipate a moderate rate hike of 25bps at the rescheduled meeting.
• Looking ahead, we expect a slight uptick in inflation driven by an anticipated increase in telecommunication tariffs. Meanwhile, the planned inflation rebasing exercise which proposes 2024 as the new base year- a period characterized by exceptionally high inflation- may artificially moderate inflation figures, obscuring the actual price pressures faced by consumers.

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