Food prices hammer Nigeria’s inflation target
NIGERIA’S inflation was little changed in September as food prices continued to rise, limiting scope for the central bank to ease policy before the end of the year.
The inflation rate in Africa’s most-populous nation decreased to 15.98 percent from 16.01 percent in August, the Abuja-based National Bureau of Statistics said yesterday. That was in line with the the median of 13 percent economists’ estimates compiled.
Prices rose 0.8 percent in the month. While inflation slowed for the eighth consecutive month, it has been outside the central bank’s target range of 6 percent to 9 percent for more than two years, even as policy makers raised the key lending rate to a record high of 14 percent.
A drop last year in the output and price of oil, Nigeria’s biggest export, caused a dollar shortage and led to a weaker naira and increased import prices. This contributed to the economy contracting for five consecutive quarters before expanding 0.6 percent in the three months to June.
Dollar supply has improved since the central bank started easing currency-trade controls, and introduced a window where portfolio investors and importers can buy foreign currency at market-determined rates.
Floods in Benue state last month have kept food prices high, negating some of the benefits of the increased availability of foreign exchange. Food prices rose 20.32 percent from a year earlier, compared with 20.25 percent in August.
The International Monetary Fund projects Nigeria’s economy to grow by 0.8 percent this year, and 1.9 percent next year from a contraction of 1.6 percent in 2016. – Bloomberg