Nigeria’s Transport Inflation Drops After 2-Year High

Nigeria witnessed a decline in transport inflation for the first time in over two years, as revealed by the National Bureau of Statistics (NBS) in its recent inflation report.

In October 2023, transport inflation slowed to 27.04%, down from the previous month’s two-year high of 27.18%. The last time such a decline occurred was back in July 2019.

This unexpected shift happened despite the challenges posed by the removal of the petrol subsidy and the surge in crude oil prices, leading to increased transportation costs across the country.

The removal of the petrol subsidy caused a seismic impact, pushing Premium Motor Spirit (PMS) prices from an average of N189 per litre to a staggering N600, marking a 200% increase.

This sudden surge in fuel prices had a ripple effect on transportation networks nationwide. As the cost of PMS soared, various modes of transport were affected, compounded by the significant depreciation of the national currency, the naira, against the USD.

The confluence of factors—subsidy removal, fuel price spikes, and currency devaluation—created a challenging environment for the transport sector, particularly impacting the aviation industry.

While transport inflation took a surprising dip, the overall inflation scenario in Nigeria reached its highest point in over 18 years, hitting 27.33% in October 2023, marking the 10th consecutive month of increase.

Breaking down the numbers, food inflation rose to 31.52%, the highest since August 2005, while core inflation accelerated to 22.58%, the highest since December 2006.

In terms of contributions to year-on-year inflation, food and non-alcoholic beverages led with 14.16%, followed by household consumables (4.57%), clothing and footwear (2.09%), and transport (1.78%).

The urban region experienced an inflation rate of 29.29%, while rural inflation reached 25.58% in the same period.

Experts weigh in on the situation, with some noting that the rising cost of transportation has played a role in driving up food inflation, affecting the overall headline index.

However, the decline in transport inflation may indicate a potential stability in transport prices, signaling a slowdown in the pace of price increases rather than an actual decrease.

Looking beyond transportation, these economic dynamics have broader implications for Nigeria’s economy, necessitating strategic policy adjustments to balance growth and stability.