Nigeria’s consumer inflation rose for the fourth straight month in June to hit 8.2%, a 10-month high, driven by higher food prices, the statistics bureau said.
Food prices, the biggest contributor to the headline index, jumped 9.8% year-on-year in June, after rising 9.7% the previous month.
“Prices were pushed higher as a result of higher prices in the bread and cereals, meats, fish, and dairy groups,” the National Bureau of Statistics said in a statement.
Consumer inflation in Nigeria was 8% in May and has been going up wince it hit an all time low of 7.8% in October. Considering the very active raining season it is unlikely food inflation will continue to rise this much in my opinion. Much of this also depends on some of this items that we import and cost of transporting these food stuffs to its consumption destination.
Is there a silver lining?
What is good about this is that it might push CBN Treasury Bills rate northwards. TB rates dropped below 10% last week and this might make the CBN tighten its monetary policy noose harder in the next MPR meeting.
What analyst think?
“Inflation is likely to become … a concern to markets in the second half as our forecasts suggest a peak in inflation in August (at) 8.7 percent, close to the upper band of the central bank’s target,” analysts at Vetiva Capital said in a note.
“With the recent compression in fixed-income yields, as short-tenor maturities head south below the 10 percent levels, the risks of negative real rates on Nigerian assets will again resurface.”
What the CBN Might do
Nigeria’s central bank has said it wants to keep inflation between 6 and 9 percent this year and has a longer-term goal of reducing it to around 5 percent by the end of 2015.
The central bank will hold its monetary policy meeting next Tuesday to set interest rates and is sure to take rising inflation into account. Analysts expect rates to remain on hold at 12 percent but say the tightening cycle could resume if the inflation outlook worsens.
The statistics office said on Tuesday it expects Nigeria’s economy to grow by at least 6.2 percent this year following a solid first-quarter performance.
Source Parts of this article was sourced from Reuters