Inflation: Nigeria consumer prices fall for 7th month straight

Falling food prices led the move lower in Nigeria’s headline inflation rate.

Vehicles and pedestrians walk by the Ikeja computer village market in Lagos, Nigeria, on Monday, March 29, 2021
Falling headline inflation is likely to give Nigeria's central bank sufficient space to hold interest rates steady at its next meeting, say analysts [File: Bloomberg]

Nigeria continues to buck the global trend of rising prices, with consumer prices ticking lower for the seventh month running, government figures showed on Monday.

Nigeria’s inflation rate fell to 15.99 percent in October compared with the same period last year, and was 0.64 percent lower than September’s annualised reading, the country’s National Statistics office said.

The drop in the headline rate was driven by easing annual food inflation, with prices falling from 19.5 percent in September to 18.3 percent in October.

“Domestic factors appear to be behind the drop in food price pressures; imported food inflation remained stable,” noted Capital Economics Virag Forizs in a client note on Monday.

The downward trend, said analysts, is likely to give the country’s monetary policymakers sufficient space to hold interest rates steady when they meet next week, rather than be compelled to increase them to cool rising prices – a move that could also weigh on economic growth in Africa’s largest economy.

Inflation has exceeded the central bank’s targeted rate of 6 percent – 9 percent for years.  Forizs said that while it is like to keep edging lower over the coming months, inflation is unlikely to fall within the central bank’s target range “any time soon.”

She added that ‘increasingly distortionary” foreign exchange rules will continue to weigh on the country’s currency, the naira, which will “keep imported goods inflation high.”

Source: Al Jazeera