Inflation rate for the communication sector fell to 2.3% year on year in the month of November down from 2.5% in the previous month of October 2024.
This according to the latest Composite Inflation Data for the month of November 2024 released by the National Bureau of Statistics.
Inflation rate in the telecoms sector contrast what is obtainable in other parts of the country reflecting a general price freeze that has been synonymous with the sector.
What the data is saying
According to the National Bureau of Statistics, the inflation rate for the month of November rose to a 26 year high of 34.6% as prices escalated across several sectors of the economy.
- For example, Food & Non Alcoholic Bev. recorded an annual inflation rate of 39.9% for the month of November.
- Meanwhile Clothing and Footwear Housing Water, Electricity, Gas and Other Fuel Furnishings & Household Equipment Maintenance recorded inflation rates of 20.2%, 29% and 22% respectively.
- Health, Transport, Recreation & Culture, Education, Restaurant & Hotels all recorded inflation rates of 22.8%, 30.5%, 20.3% and 34.8% respectively.
The communication industry however recorded an inflation rate of just 2.3% while the Recreation & Culture recorded 9.8% inflation rates.
On a month on month basis, the communication industry is reported an inflation rate of just 0.3% the lowest of any of the sectors captured by the NBS.
Why this matters
The telecommunication sector’s steady inflation rate, which fell to 2.3% in November 2024, starkly contrasts with the broader economy’s soaring inflation of 34.6%.
While consumers might view this as a win, it highlights a brewing tension between regulators and telcos over pricing policies.
Telecom operators, through industry association ALTON (Association of Licensed Telecom Operators of Nigeria), have repeatedly called for an increase in service pricing to a cost-reflective level.
In April 2024, Nairametrics reported that ALTON and the Association of Telecommunication Companies of Nigeria (ATCON) jointly stated that the telecom industry is the only sector that has not reviewed its prices in over 11 years, despite rising inflation and other economic challenges.
- ALTON’s Chairman, Gbenga Adebayo, emphasized that regulatory restraints have prevented the industry from making necessary price adjustments to reflect the true cost of operations.
- By May 2024, ALTON appealed to the government not to use the telecom sector as a palliative measure for economic challenges.
- They highlighted that the last price review in the sector was in 2013, and costs for energy, equipment, and other operational necessities have surged since then.
More recently, Nairametrics reported in October 2024 that the approval of a 97% price hike by Starlink for its subscription services sparked controversy among local telecom operators.
- Stakeholders accused the Nigerian Communications Commission (NCC) of double standards, arguing that similar requests by local telcos have been consistently denied despite escalating operational expenses.
- Regulators, on the other hand, seem to favor leveraging economies of scale over pricing adjustments, expecting telecom companies to absorb costs by expanding their user base and optimizing operations.
Meanwhile the proposed rejig of the weighting of the consumer price index basket suggest Information and Communication will now have a weighting of 3.3 compared to 0.7 that is currently being used.
The communication industry is one of the largest sector in the country ranking number 3 in the country based on size.