The inflation rate rose to 21.8% in January from 21.3% a month earlier and was the highest since September 2005.
(Bloomberg) — Nigerian inflation unexpectedly quickened at the fastest pace in almost two decades, adding to pressure on businesses and consumers before next week’s presidential election.
The inflation rate rose to 21.8% in January from 21.3% a month earlier and was the highest since September 2005, according to data published on the National Bureau of Statistics’ website on Wednesday. The median estimate of nine economists in a Bloomberg survey was 21.3%.
The acceleration was stoked by soaring costs of bread and cereals, signaling that grain shortages caused by Russia’s year-long war with Ukraine is still impacting prices. The rate has now been at more than double the ceiling of the monetary policy committee’s 6% to 9% target since June, in a nation in which the United Nations says 25 million people will go hungry this year and about 133 million more live in extreme poverty — the most in any single country.
Food inflation quickened to 24.3% from 23.7% and core price growth, a reflection of underlying price pressures, accelerated to 19.2% from 18.5%. Prices rose 1.87% in the month.
The surprise uptick adds to the frustrations wrought on Nigerians by the chaotic rollout of a central bank policy to end the use of old naira notes. The demonetization plan has led to a scarcity of cash, fueled protests and crippled businesses. It’s also caused a schism within the ruling All Progressives Congress, whose candidate Bola Tinubu is one of the frontrunners to become Nigeria’s next president.
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Three northern state governors all belonging to the governing party have sued the federal government and last week obtained a court order to suspend the plan until their case is heard. At least two other states have since joined the lawsuit.
The botched implementation of the naira redesign and anxiety about elections that kick off on Feb. 25 is expected to result in tepid economic growth this quarter, said Daniel Sodimu, sub-Saharan Africa analyst at FrontierView said.
These issues may see the central bank’s monetary policy committee slow the pace of interest-rate hikes or leave the cost of borrowing unchanged when it holds its next two-day meeting starting March 20.
Sodimu sees rate hikes moderating, while the median estimate of four economist in a separate Bloomberg survey expects the MPC to stand pat after combined increases of 600 basis points since May.