Nigerian Inflation Quickens، Putting Another Rate Hike in Focus

Nigeria’s annual inflation quickened for an 18th straight month، raising the prospect of another interest-rate increase when the central bank meets next week.  

Consumer prices rose 34.2% in June from 34% a month earlier، according to data published on the website of the National Bureau of Statistics on Monday. The median estimate of eight economists in a Bloomberg survey was 34%.

The main drivers of the acceleration were higher rental، transport and grain costs. Food inflation quickened to 40.9% in June from 40.7% a month earlier and core price growth، which excludes agricultural produces and energy، accelerated to 27.4% from 27%.

Central bank Governor Olayemi Cardoso has repeatedly stressed that policymakers are committed to defeating inflation، while suggesting last week that rates could come down in the not-too-distant-future if price pressures moderated.

Raising interest rates

The monetary policy committee has raised interest rates by 14.75 percentage points since May 2022 to 26.25%. It is due to give its next rate decision on July 23.

Still، inflation may start to ease in July. The impact of the scaling back of gasoline subsides a year ago and a currency devaluation on inflation should start to recede and the suspension of import duties on certain food staples should reduce costs.  

Also، farmers in the nation’s central region are reporting a glut in harvests of Irish and sweet potatoes، with the price of a 65 kilogram bag crashing by a third to 45،000 naira ($28).