Nigeria’s inflation report was made public by the National Bureau of Statistics (NBS) last week, and it showed a startling drop in Transportation inflation for the first time in more than two years.
In particular, Nigeria’s transportation inflation decreased to 27.04% in October 2023 from 27.18%, the two-year peak, the month before.
Interestingly, July 2019 marked the last time that transport inflation fell. The decrease occurred in spite of the spike in the price of crude oil and the increase in the cost of transportation throughout the nation’s various regions after the gasoline subsidy was removed.
In Nigeria, the elimination of the fuel subsidy sent shockwaves through the transportation industry and the broader economy. The average price of Premium Motor Spirit (PMS) increased by over 200%, from a relatively low N189 per litre to an astounding N600.
The transportation networks throughout the nation were affected by this sudden and significant increase in fuel prices.
The nation saw a significant impact on transportation as PMS costs skyrocketed. Numerous forms of transportation were impacted by the cascading increase in fuel costs.
The removal of subsidies also caused Nigeria’s national currency, the naira, to significantly depreciate in value relative to the US dollar.
The national currency’s floating and the National Autonomous Foreign Exchange Market’s (NAFEM) integration of several FX markets drove a depreciation of more than 40%.
The transportation sector, especially the aviation sector, faced more difficulties as a result of this devaluation.
The elimination of subsidies, increases in fuel prices, and depreciation of currency all came together to create a perfect storm for the aviation sector.
Airlines were already negotiating an increasingly dangerous landscape due to the rising expenses of aviation fuel.