(Bloomberg) -- Nigeria’s annual inflation quickened for an 18th straight month, raising the prospect of another interest-rate increase when the central bank meets next week.
Consumer prices rose 34.2% in June from 34% a month earlier, according to data published on the website of the National Bureau of Statistics on Monday. The median estimate of eight economists in a Bloomberg survey was 34%.
The main drivers of the acceleration were higher rental, transport and grain costs. Food inflation quickened to 40.9% at an annual rate in June from 40.7% a month earlier and core price growth, which excludes agricultural produces and energy, accelerated to 27.4% from 27%.
What Bloomberg Economics Says...
“Nigeria’s inflation likely peaked in June, with a gradual slowdown set to commence in July. The easing will be helped by a high base effect and a more stable naira. In order to cement the inflation slowdown and speed up a return to positive real rates, we expect the central bank to implement a final rate hike for the cycle when it meets on July 23.”
— Yvonne Mhango, Africa economist
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Central bank Governor Olayemi Cardoso has repeatedly stressed that policymakers are committed to defeating inflation, while suggesting last week that rates could come down in the not-too-distant-future if price pressures moderated.
The monetary policy committee has raised interest rates by 14.75 percentage points since May 2022 to 26.25%. It is due to give its next rate decision on July 23.
Still, inflation may start to ease in July. The impact of the scaling back of gasoline subsides a year ago and a currency devaluation on inflation should start to recede and the suspension of import duties on certain food staples should reduce costs.
Also, farmers in the nation’s central region are reporting a glut in harvests of Irish and sweet potatoes, with the price of a 65 kilogram bag crashing by a third to 45,000 naira ($28).
--With assistance from Simbarashe Gumbo.
(Updates with chart and comment from Bloomberg Economics)
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