Nigeria’s annual inflation rate climbed to its highest level in five months as the fallout from the Iran war continued to fan energy prices, complicating the outlook for policymakers ahead of their first meeting since the conflict began.
Nigeria’s annual inflation rate climbed to its highest level in five months as the fallout from the Iran war continued to fan energy prices, complicating the outlook for policymakers ahead of their first meeting since the conflict began.
Consumer prices rose 15.7% in April from 15.4% the month before, data published by the National Bureau of Statistics on Friday showed. That matched the median estimate of three economists in a Bloomberg survey. Prices rose 2.1% in the month.
Uncertainty over the duration of the conflict, coupled with soaring energy, food and fertilizer costs driven by the near-closure of the Strait of Hormuz, a key artery for global seaborne oil, liquefied natural gas and fertilizer, has made policymakers’ jobs more difficult. Many central banks have opted to hold rates steady, and Nigeria is likely to follow suit on May 20.
The rise in the inflation rate, “alongside the central bank’s concerns about its credibility, suggests that monetary easing will remain off the agenda until at least the end of the year,” David Omojomolo, Africa economist at Capital Economics wrote in a note. “Spillovers from the surge in petrol and diesel prices look set to drive inflation higher over the coming months, with it peaking around 17% year-on-year in the third quarter.”
The central bank delivered a smaller-than-expected 50 basis-point cut at its only meeting of the year in February, taking borrowing costs to 26.5%.
Nigeria has tried to blunt the impact of higher prices by cutting trade levies on selected food items and pharmaceuticals. The pickup in inflation may increase pressure on authorities to do more, while posing fresh challenges for new Finance Minister Taiwo Oyedele, who has ruled out a return to fuel subsidies scrapped in 2023.
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