Nigeria Inflation Little Changed in September as Food Costs Rise

LAGOS (Capital Markets in Africa) – Nigerian inflation was little changed in September as food prices continued to rise, limiting the scope for the central bank to ease policy before the end of the year.

The inflation rate in Africa’s most-populous nation decreased to 15.98 percent from 16.01 percent in August, the Abuja-based National Bureau of Statistics said in an e-mailed report on Tuesday. That was in line with the median of 13 economists’ estimates compiled by Bloomberg. Prices rose 0.8 percent in the month.

While inflation slowed for the eighth consecutive month, it has been outside the central bank’s target range of 6 percent to 9 percent for more than two years even as policy makers raised the key lending rate to a record high of 14 percent. A drop last year in the output and price of oil, Nigeria’s biggest export, caused a dollar shortage and led to a weaker naira and increased import prices. This contributed to the economy contracting for five straight quarters before expanding 0.6 percent in the three months through June.

Dollar supply has improved since the central bank started easing currency-trade controls, and introduced a window where portfolio investors and importers can buy foreign currency at market-determined rates. Floods in Benue state last month have kept food prices high, negating some of the benefits of the increased availability of foreign exchange.

Food prices rose 20.32 percent from a year earlier, compared with 20.25 percent in August, driven by the costs of potatoes, meat, and oils, and fats, the statistics office said.

“A spike in food price inflation, due to the poor harvest in some parts of the country, offset the declining inflationary effect of the currency weakness,” theWorld Bank said last week.

The International Monetary Fund projects Nigeria’s economy to grow by 0.8 percent this year, and 1.9 percent next year from a contraction of 1.6 percent in 2016 and sees inflation staying above target through 2018.