Nigerian inflation quickens more than forecast on food costs
JOHANNESBURG - Nigerian inflation accelerated more than expected in August as food prices continued to surge on dollar restrictions, border closures and floods.
Consumer prices climbed 13.2% from a year earlier, compared with 12.8% in July, Abuja-based National Bureau of Statistics said in a report published Tuesday on its website. The median of three economists’ estimates in a Bloomberg survey was 13%. Costs rose 1.3% in the month.
Inflation has been above the central bank’s target range of 6% to 9% for more than five years and will probably continue accelerating due to a currency that’s under pressure and a recent order by President Muhammadu Buhari that restricts dollar access for all food and fertilizer imports. That will drive traders to the black-market for foreign exchange, where they will pay a lot more.
Food prices have been a key driver of inflation in the nation of nearly 200 million people, and the index rose by 16% from a year earlier. Costs rose 1.7% in the month, the most since June 2017. Closure of the Nigeria’s land borders that started in August 2019 and frequent clashes between herders and farmers weigh on supply and floods in the northern state of Kebbi have destroyed more than 25% of the rice harvest. The grain is a staple in the country.
Sticky inflation and a need to support the naira that it’s had to devalue twice this year will probably mean the central bank will hold its key interest rate at 12.5% next week. That’s even as the economy contracted by 6.1% in the second quarter, the most in at least a decade.