Nigerian inflation that quickened more than expected to an 11-month high in May may spur the central bank to raise the key interest rate again next month as it suggests price pressures are becoming entrenched in the economy.
Consumer prices rose 17.7 per cent from a year earlier, compared with 16.8 per cent in April, according to data released on the National Bureau of Statistics’ website on Wednesday. That topped the median estimate of 17.5 per cent from six economists in a Bloomberg survey. Food and gas were the largest contributors. Prices climbed 1.78 per cent over the previous month.
The figure suggests inflation that has breached the nine per cent ceiling of the central bank’s target band for almost seven years may be on a galloping trend, something the monetary policy committee said in May it aimed to prevent with its first rate increase in six years. If sustained, the MPC may be prompted to increase the key rate again on July 26.
Throttled supply chains due to the war in Ukraine, China’s Covid-19 lockdowns, extreme weather and security challenges in Nigeria’s food producing regions have been placing upward pressure on prices of everything from transport to bread.
Annual food-price growth accelerated to 19.5 per cent from 18.4 per cent in April and core inflation, which strips out the more volatile food and energy components, quickened to 14.9 per cent, compared with 14.2 per cent a month prior.
The increase in May is 0.22 per cent points lower compared to the rate recorded in May 2021, which is (17.93) per cent,” the NBS report stated. “This means that the headline inflation rate slowed down in the month of May when compared to the same month in the previous year.
It further said that on a month-on-month basis, the headline index increased to 1.78 per cent in May 2022, representing 0.02 per cent points higher than the 1.76 per cent rate recorded in April 2022.