Nigerian inflation downshifts to 12-month low

Nigerian inflation slowed to a 12-month low in November, easing pressure on the central bank to increase borrowing costs as the spread of the omicron variant may crimp economic growth.

Consumer prices rose 15.4% in November from a year earlier, compared with 15.99% in the previous month, Statistician-General Simon Harry told reporters Wednesday in Abuja, the capital. That’s the lowest level since November 2020. The median estimate of nine economists in a Bloomberg survey was 15.3%.

The drop in the rate was due to food-price growth slowing to 17.2%, compared with 18.3% in October.

While inflation has been above the 9% ceiling of the central bank’s target band for more than six years, it forecasts price growth to continue to slow after peaking in March. The bank said last month it expects a bumper harvest and improving security in northern Nigeria, where an Islamist insurgency has been raging for more than a decade, to ease disruptions to food supply.

Upward price pressures from holiday spending may cause a blip in December, Ikemesit Effiong, head of research at SBM Intelligence, said ahead of the release

“We anticipate inflation numbers in 2022 to continue to slow down, after the halt in December 2021,” he said. “This decline will, however, be muted by political spending as Nigeria heads into another election cycle.”

The slowdown in inflation will likely see the monetary policy committee hold its key interest rate next month to aid the economy’s rebound as international travel bans imposed after the detection of the omicron variant in passengers traveling abroad and a surge in Covid-19 cases may be a drag on its recovery.

Governor Godwin Emefiele said last month, when the bank held rates, that current monetary policy should be allowed to continue “for a little longer” to achieve price stability and provide an enabling environment for sustainable growth.

A separate Bloomberg survey of 12 economists projects that monetary policy makers will start hiking interest rates from the second quarter, compared with a previous expectation for it to start in the first quarter.