Rising Operating Costs: Firms Raise Prices Amid Naira Fall, High Raw Materials and Energy Costs

Numerous companies in Nigeria are raising their prices due to escalating operational expenses, which are driven by the depreciation of the naira, as well as soaring costs of raw materials and energy. Over the past year, the prices of electricity, data, telecommunications, and fuel have surged by more than 50%, impacting both businesses and consumers.

Inflation Rate Decreases, But Prices Remain High

The National Bureau of Statistics (NBS) has recently published the Consumer Price Index (CPI) for the country, indicating a decline in the rebased inflation rate to 24.48% in January, down from 34.48% in December. This rate further decreased to 23.2% in February. Nevertheless, despite this reduction, the prices of goods and services remain elevated, as many companies are transferring the increased costs to consumers.

MultiChoice, the parent company of DStv and GOtv, announced a price adjustment effective March 1, 2025, citing the rising expenses associated with delivering premium content. This price increase faced opposition from the Federal Competition and Consumer Protection Commission (FCCPC). MultiChoice has raised the price of its DStv Compact bouquet from N15,700 to N19,000, the Compact Plus from N30,000, and the Premium subscription to N44,500.

Following a prolonged dispute with the Nigerian Communication Commission (NCC), telecommunications companies were permitted to increase their prices by 50%. This adjustment was aimed at enhancing their revenue to manage escalating costs. MTN Nigeria explained that the price increase was necessary to enable operators to continue investing in infrastructure and innovation, ultimately benefiting consumers through enhanced services and connectivity.

Recent financial results from multinationals listed on the Nigerian Exchange Limited (NGX) indicate that the rising costs of goods and services in 2024 significantly impacted their profits, with a 68.5% increase in costs compared to the previous year. Notable companies affected include MTN, Dangote Cement, Nestle, International Breweries, Nigeria Breweries, PZ Cussons, Cadbury, Axa Mansard, Unilever, Beta Glass, Total Energies, and Lafarge Africa.

The  rising operating costs in Nigeria, fueled by the naira’s decline, high raw materials, and energy prices, have led to a surge in prices of goods and services, with firms passing on the increased costs to consumers, ultimately affecting the overall cost of living and economic growth. This trend is expected to continue unless urgent measures are taken to address the underlying causes of the rising costs. The government, policymakers, and stakeholders must work together to implement policies that will stabilize the economy, reduce inflation, and protect the welfare of Nigerian citizens.