Consumer prices rose 19.6% in July compared with 18.6% in June Surge in inflation may see central bank hike rates on Sept. 27
Sign up for the New Economy Daily newsletter, follow us @economics and subscribe to our podcast.
Nigeria’s inflation rate climbed to a near 17-year high in July, fueled by bread, cereal, gas and transport costs.
Annual inflation quickened to 19.6% in Africa’s biggest economy, compared with 18.6% in June, according to data released by the National Bureau of Statistics on its website on Monday. That’s the highest level since September 2005 and more than double the 9% ceiling of the central bank’s target band. The median of seven economists’ estimates in a Bloomberg survey was 19.4%.
The surge may persuade Nigeria’s monetary policy committee to raise its key interest rate for a third successive meeting on Sept. 27. Governor Godwin Emefiele said at the MPC’s July meeting that if inflation continues to accelerate at an aggressive rate it will further tighten monetary policy. The MPC has hiked its interest rate by 250 basis points since May.
Cost pressures are being fanned by a high import bill caused by surging commodity prices, supply shortages and a slide in the naira to record lows against the dollar that’s prompted the Senate to summon Emefiele to explain the “rapid” depreciation. The naira was little changed against the dollar at 427.85 by 12:26 p.m., local time.
Annual food-price growth soared to 22% from 20.6% in June and core inflation, which strips out food costs, quickened to 16.26% in July, compared with 15.75% the previous month. Prices rose 1.8% against the previous month.
Persistent security issues in the country’s food producing regions, high diesel costs and continued currency weakness are likely to place upward pressure on prices in coming months.