Nigerian inflation accelerated more than anticipated to a 28-year high, as the nation’s surging currency has yet to reflect on the cost of imported goods.
Consumer prices rose an annual 33.2% from 31.7% in February, the National Bureau of Statistics said Monday in a statement published on its website. That was higher than the median estimate of five economists in a survey of 32.9%.
After losing 43% of its value against the dollar in the first two-and-a-half months of this year because of a devaluation, Africa’s largest oil producer’s currency has strengthened 34% since mid-March, the most in the world among global currencies.
The appreciation has been driven by steps taken by the central bank to support the bruised naira.
The Central Bank of Nigeria raised borrowing rates by 400 basis points in February to 22.75%, and by another 200 basis points to 24.75% in March.
It also cleared a backlog of overdue dollar-purchase agreements estimated at $7 billion and narrowed the gap between the policy rate and yields on short-dated paper.
The full benefits of a stronger currency were not reflected in March inflation as the data collection for computing the rate typically stops around the middle of the month.
The reading also took place before a threefold increase in electricity prices for some urban consumers — which is likely to exert pressure on household budgets and businesses — came into effect.
Central Bank of Nigeria’s Governor, Olayemi Cardoso and his committee members will now have to assess the impact of both on inflation at their May 20-21 policy meeting, which takes place a week before the anniversary of President Bola Tinubu’s first year in office.
Another rate increase, while expected, is likely to draw criticism. The Manufacturing Association of Nigeria complained last month that the higher cost of borrowing “reduces access to funds, manufacturing investments and competitiveness.”
The cost-of-living crisis has also fanned deadly protests in the country. This month the government began distributing grain to households that have been badly affected by soaring food prices.
Annual food inflation quickened to 40% in March from 37.9% a month earlier, while core-price growth — which excludes farm produce and energy costs — accelerated to 25.9% from 25.1%.
