Nigeria inflation at 18-year high raises pressure for rate hike
Nigeria’s inflation rate jumped for a ninth straight month in September on rising transport and food prices, and may prompt policymakers at the central bank to hike borrowing costs at its next meeting.
Consumer prices rose 26.7% year-on-year, compared with 25.8% in August, according to data published on the National Bureau of Statistics’ website on Monday. That’s the fastest pace since August 2005, though below the 27.1% median estimate of six economists in a Bloomberg survey. Prices rose 2.1% in the month.
Prices have remained elevated since the government removed a decades-old fuel subsidy in May and because of the rapid depreciation of the naira against the greenback on both the official and parallel markets, in part because of dollar shortages.
Annual food inflation quickened to 30.6% in September from 29% in August and core price growth, which excludes farm-produce and energy costs, accelerated to 21.8% from 21%.
The central bank’s monetary policy committee is expected to raise interest rates for an unprecedented ninth time in a row when it holds its next meeting in a bid to assert its credibility, inflation fighting mettle and aid the currency. The MPC has increased rates by 725 basis points since May 2022 to 18.75%.
The International Monetary Fund recommended that the authorities “urgently tighten monetary policy and take measures to ensure markets maintain full confidence” in the central bank, the Lagos-based Punch newspaper cited the fund as saying on Monday.
“Tightening monetary policy will have to include raising the monetary policy rate and mopping up excess naira liquidity,” the IMF said, according to the paper. “Market confidence will benefit from more clarity on Central Bank of Nigeria dollar obligations.”
The bank has yet to announce when it will hold its next monetary policy committee meeting. A gathering scheduled for Sept. 25-26 was postponed after the nomination of Olayemi Cardoso as the bank’s new governor.
Since his appointment, Cardoso has announced measures to ease pressure on the naira, including lifting a ban on the purchase of dollars on the official market to import 43 specified items.
