• Inflation rises to 34.8%, fourth consecutive increase
• Expert worries over FG’s deficit financing method on inflation
• WFP sees 33m Nigerians face acute hunger in 2025
• Revenue targets should be based on empirical studies, says Yusuf
 
After months of inflationary turbulence, which ensured that staple foods were barely within the reach of average Nigerians, and despite the huge spending during the Yuletide, food inflation eased slightly to 39.84 per cent in December 2024 from the 39.93 per cent recorded in November. This is according to the consumer price index (CPI) data released yesterday by the National Bureau of Statistics (NBS).
   
Bolstered by demands synonymous with the festive season, the NBS also reported that Nigeria’s headline inflation rose marginally by 0.20 per cent to 34.80 per cent in December from 34.60 per cent in November, making it the fourth consecutive increase.
   
Nigeria’s inflation rate began to rise in September 2024 when it rose to 32.70 per cent from 32.15 per cent in August. The following month, Nigeria’s inflation rate climbed to 33.80 per cent and rose further to 34.60 per cent in November.
   
Although experts believe the inflation outlook for 2025 promises to be positive, it however, depends on the Central Bank of Nigeria (CBN) pausing its monetary policy tightening measures and the reduction in fiscal risks to macroeconomic stability via limited fiscal deficit and deceleration in public debt growth.
   
The NBS data showed that the average yearly rate of food inflation for the 12 months ending December 2024 over the previous 12-month average was 39.12 per cent, which was 11.16 per cent points higher compared with the average yearly rate of change recorded in December 2023, which was 27.96 per cent.
   
Marginal as this drop may be, it is a sign of hope for many families that have been looking forward to a time when their meagre income can buy them three square meals a day.
 
 Recall that Nigeria has experienced a persistent rise in food inflation, which hit a peak of 40.9 per cent year-on-year in June 2024 before dropping momentarily to 33.40 per cent in July 2024 and further down to 32.15 in August 2024, driven essentially by the harvest season at the time before it resumed an upwards trend in September when it jumped to 37.77 per cent.
   
The December drop, which is coming at a time when the government in its 2025 budget proposal targets headline inflation of 15 per cent, gives some hope, but how long that can hold out appears elusive.
     
According to the NBS report, the drop in food inflation was driven essentially by the drop in the prices of some essential food items like yam, potatoes, rice, millet, maize flour, and coco yam, among others, which December forms part of their harvest season.
   
The question many are asking is what happens when planting season sets in by March. In July last year, the Federal Government introduced a food import duty waiver to waive import duties on essential food items like maize, rice, wheat, and cowpeas. The window period ended in December 2024. However, due to poor implementation and bureaucratic complexities, the policy didn’t quite achieve its intended goals.
     
There might still be a glimmer of hope as a recent report indicated that Nigeria has received a shipment of 32,000 tons of brown rice from Thailand as part of efforts by the government to combat the rising cost of food in the country.
   
Last year, the World Food Programme (WFP), an agency of the United Nations, announced that 33 million Nigerians could face acute hunger in 2025, this is an increase from the 25 million citizens who faced starvation in 2024.
   
Analysts have warned that food import is not a solution to the high cost of food in the country, insisting that unless the farmers are supported to return to their farms, the country will continue to experience food shortages.
   
Part of the challenges has been insecurity, which has made it difficult for farmers to go to their farms and the lack of adequate input support for farmers from the government.
   
The National President of All Farmers Association of Nigeria (AFAN), Kabir Ibrahim, in his New Year message to Nigerian farmers, said Nigeria is on the cusp of experiencing a major catastrophe’ of food insecurity if extreme care is not taken judging from the macroeconomic instability arising from currency volatility, insecurity, climate change and inequity.
     
He advised that the attainment of food sufficiency for Nigerians in the first quarter of 2025 may be the elixir for the continued existence of Nigeria as a working unit.
     
According to him, “I say this with all sense of responsibility having been involved in Agricultural advocacy for the better part of my 66 years on earth. In 2025 we must coalesce as stakeholders/farmers with the government to get Nigeria out of the stranglehold of hunger and extreme poverty.
   
“We can only do this if we work as a unified body with common interests and operating from common ground.” In his comments on the December 2024 inflation rate, the founder/CEO of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, said the inflation outlook for 2025 looks positive because of sustained moderation in exchange rate volatility, improvements in foreign reserves, and prospects of easing geopolitical tensions with the inception of Trump presidency in few days as well as a strong base effect, given the high inflationary pressures experienced in 2024.
     
According to him, “CPPE is worried about the current fixation of the National Assembly on revenue, especially the arbitrary revenue targets for Ministries, Departments and Agencies (MDAs).”
   
He noted that excessive pressure on MDAs to boost revenue and increase internally generated revenue (IGR) has profound inflationary implications. “Reality is that such pressures are invariably transmitted to investors in the form of higher fees, levies, penalties, import duties, regulatory charges etc. These outcomes conflict with government aspirations to boost investment, curb inflation and create jobs,” Yusuf said. 
   
“Revenue targets should be based on empirical studies, the absorptive capacity of the economy and due consideration of the wider economic implications.”  He noted that obsession with revenue would hurt investments, worsen inflationary pressures, aggravate poverty and impede economic growth. “There should be a careful balance act between revenue growth aspirations, desire to boost investment and commitment to moderate inflation,” he stated.
     
Speaking generally on the economy amid the inflationary trend, an economist, Johnson Chukwu, stressed the need for active collaboration between fiscal and monetary authorities in stabilising Nigeria’s economy in 2025.
     
Specifically on the country’s Macroeconomic and Sectoral Outlook in 2025, Chukwu identified inflationary pressures as a critical threat to economic performance. He warned that without coordinated efforts to address this challenge, the nation’s growth prospects could be significantly undermined.
     
 Looking ahead, Chukwu explained that inflationary pressures could moderate in 2025 if key reforms stabilise the foreign exchange market and address structural bottlenecks.
   
According to him, reforms that would enhance market efficiency and reduce systemic inefficiencies will be critical in curbing inflation. However, Chukwu warned that the Federal Government’s deficit financing methods for 2025 could worsen inflationary trends, potentially offsetting the gains from monetary and structural reforms.
     
“The year 2025 will test the resilience of policymakers and their ability to harmonize efforts for a more stable and prosperous economy. Fiscal prudence and better coordination with monetary policy will be necessary to avoid compounding inflationary pressures,” he added.  He said the CBN is expected to maintain its tightening stance in early 2025 to combat elevated inflation.
   
“Nonetheless, signs of moderation could prompt a dovish pivot aimed at stimulating growth and improving real income levels,” he stated. Therefore, he warned that the current strategy reflects cautious optimism as the CBN navigates the complexities of inflation control, economic growth, and effective monetary transmission.
     
On the bond market, Chukwu noted that its performance in 2025 will depend significantly on the Central Bank of Nigeria’s monetary stance and inflationary developments.
     
He pointed out that interest rates are expected to remain elevated in 2025, reflecting the CBN’s commitment to curbing persistent inflation, adding that this will influence investor sentiment and activity in fixed-income instruments.
     
For the stock market, Chukwu identified key factors that will shape its trajectory in 2025. These include the trajectory of economic growth, the direction of monetary policy and its impact on fixed-income yields, and corporate earnings performances.
     
He cited the impressive nine-month performances and interim dividend payments from some quoted companies, particularly in the banking, oil and gas, insurance, and agriculture sectors, noting that these sectors would boost the performance of the market this year.
     
“Given these strong fundamentals, we project that equity prices will remain relatively stable going into 2025 as investors position themselves for full-year 2024 dividend payments,” Chukwu said.