(Bloomberg) -- Nigerian inflation quickened at its fastest pace in almost 18 years, placing pressure on the central bank to extend its longest cycle of monetary tightening in more than a decade.

The inflation rate rose to 21.9% in February from 21.8% a month earlier, according to data published on the National Bureau of Statistics’ website on Wednesday. That’s the highest level since September 2005 and was slightly above the 21.8% median estimate of nine economists in a Bloomberg survey.

The rate has now been at more than double the ceiling of the monetary policy committee’s 6% to 9% target since June.

The increase was fueled by rising costs of cooking oil, cereals and vegetables pushing food price growth to 24.4% from 24.3% in January. 

“Food price inflation is volatile and sticky in Nigeria and is expected to trend at elevated levels in the next few months,” Pieter Scribante, a political economist at South Africa-based Oxford Economics Africa, said ahead of the data release.

Core inflation, a reflection of underlying price pressures, slowed to 18.8% from 19.2%, likely due to a chaotic rollout of a central bank plan to replace old naira notes. The currency swap, which has since been postponed, led to a scarcity of cash, which dampened spending.

Read more: Nigeria Delays Plan to Replace Old Naira Notes After Court Order

“The most severe impacts of cash shortages were seen with regards to output and new orders, which both fell substantially as customers were often unable to secure the funds to commit to spending,” S&P Global said in a statement earlier this month. 

The MPC has jacked up borrowing costs by a combined 600 basis points since May and will hold its first rate meeting next week since the All Progressives Congress’s candidate Bola Tinubu won last month’s presidential elections. Tinubu, who is due to take office in May, has vowed to address the high living costs. 

Rising inflation could force the central bank’s hand and prompt it to raise borrowing costs by another 100 basis points on March 21, Scribante said. 

The naira declined by 0.1% to 461.29 per dollar at 2:28 p.m. in the capital, Lagos. The yield on the nation’s dollar bond maturing in 2032 rose 355 basis points to 13.3%.

 

--With assistance from Simbarashe Gumbo.

©2023 Bloomberg L.P.