Nigerian Inflation Rate Rises to Two-Year High on Food

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

Consumer prices climbed 12.6% from a year earlier, compared with 12.4% in May, Abuja-based National Bureau of Statistics said in a report published Friday on it website. That matched the median of four economists’ estimates in a Bloomberg survey. Costs rose 1.2% in the month.

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%, 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 470 per dollar on Thursday, compared with official rates of between 360 and 381.
  • 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 cut interest rates to prop up Africa’s largest economy. The monetary policy committee unexpectedly cut its benchmark rate to the lowest in four years in May.

©2020 Bloomberg L.P.

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