Nigerian inflation rate rises more than expected on food costs
INTERNATIONAL - Nigerian inflation accelerated for a 13th straight month in September on surging food prices driven by border closures and dollar restrictions as well as lower interest rates.
Consumer prices rose 13.7% from a year earlier, compared with 13.2% in August, Abuja-based National Bureau of Statistics said in a report published on its website on Thursday.
The median estimate of five economists surveyed by Bloomberg was 13.3%. Costs rose 1.5% in the month.
- The Central Bank of Nigeria unexpectedly cut its key interest rate by 100 basis points in September even as price growth has been above the 9% top of the target range since 2015, saying that traditional tools of monetary policy may not be helpful in addressing current inflationary pressures.
- Goldman Sachs Group Inc. expects Nigeria’s inflation to accelerate in coming months, peaking close to 18% year-on-year in the second quarter of 2021. The main source of price pressure has been pass-through from the recent naira depreciation, analysts at the bank said in a research note.
- Nigerian President Muhammadu Buhari’s order to the central bank to stop providing foreign exchange for food and fertilizer imports, the closure of its land borders since August 2019, violent farm attacks and farmer-herder clashes in the nation’s key agriculture states have seen prices soar. The food index rose by 16.7% from a year earlier, while costs increased 1.9% in the month, the most since June 2017.
- The International Monetary Fund expects Nigeria’s economy to shrink 4.3%.
What Bloomberg’s Economist Says
“This is the fifth year inflation has exceeded the central bank target range of 6% to 9%. This trend is likely to continue as border closures, initially ordered in August to curb smuggling of rice and other products, remain in place,” said Boingotlo Gasealahwe, Africa economist.