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Thursday, June 30, 2022

Nigerian Inflation Rate Rises to 12.6% on Food Prices

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Nigerian inflation accelerated for the 10th straight month in June to 12.6 percent as restrictions on access to foreign exchange and continued border closures drove up prices.

Consumer prices climbed 12.6 percent from a year earlier, compared with 12.4 percent in May, the National Bureau of Statistics (NBS) said in a report published Friday on it website.

Key Insights

A drop in the naira added to food inflation that’s already been pushed up by border closures, trade restrictions to curb the spread of the coronavirus and clashes between herders and farmers.

The food index, which accounts for more than half the inflation basket, rose 15.2 percent, the most since March 2018.

The central bank’s move to end official foreign-exchange supply for corn imports to boost local production could increase costs further.

That’s because it could lead to shortages and drive businesses to access hard currency on the parallel market, where the naira exchanged hands at N470 per dollar on Thursday, compared with official rates of between N360 and N381.

Nigerian Inflation has been above the central bank’s target band of 6% to 9% for over five years, making it difficult for policy makers to undertake a steep cut in interest rates.

The monetary policy committee unexpectedly cut its benchmark rate for the first time in more than four years in May and is scheduled to announce its next decision on July 21.

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