Why we shouldn’t celebrate Nigeria’s declining inflation
2023 started on a good note: the raging global inflation of 2022 finally cooled down in December. This means that prices increased at a slower pace than in December 2021.
The US, which experienced its highest inflation in 40 years last year, recorded the sixth consecutive decline in its annual consumer price index (CPI) in December, prompting the Fed to reconsider increasing interest rates at a slower pace. Investors also reacted favourably to the great news. Following the announcement of the December inflation report, the stock market—specifically the S&P 500 and Nasdaq stocks—appreciated.
Key takeaways:
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Consumers across several parts of the world experienced relief in their pockets during the festive season as headline inflation declined.
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In Western markets like the US, UK and Europe, this decline was driven mainly by reduced petrol prices caused by lower demand. This gives central banks, especially the US Fed, room to ease off on its aggressively hawkish inflation watch.
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Nigerians did not have that luxury as petrol prices, which are not reflective of global prices, continued to rise as the government struggled with its unsustainable petrol subsidy.
The UK was not excluded from the party as its inflation reduced to 10.6% in its second consecutive month. Likewise, in Europe, consumer inflation expectations have been reduced for the first time since 2021.
In Nigeria, inflation reduced year-on-year from 21.47% to 21.34%, the first decline since November 2021. I'm sure I speak for all of us when I say this is music to our ears, given the pressure
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