daniel chigunwe
Nigerian inflation surged to a 28-high in February after the authorities allowed the naira to weaken again, raising the specter of a 10th straight interest-rate hike at the end of this month.
Consumer prices rose an annual 31.7% from 29.9% in January, the National Bureau of Statistics said Friday in a statement published on its website. The median estimate of five economists in a Bloomberg survey was for a 31.3 percent increase. Prices advanced 3.1 percent in the month.
To combat inflation and support the currency, the central bank will likely raise interest rates again at its March 25-26 monetary policy committee meeting. Last month, the MPC at its first meeting since July increased the minimum cash reserve ratio for banks to 45 percent from 32.5 percent and lifted borrowing costs by 400 basis points to 22.75 percent to help curb naira liquidity and contain pricing pressures
What Bloomberg Economists Say…
“Nigeria’s inflation quickened at a faster pace than expected in February, driven by a larger than anticipated jump in food and energy prices. As a result, the central bank now has no other option than to implement another sizable rate hike later this month. Front-loading rate hikes will limit inflation’s climb and establish a sub-40% ceiling.”
Africa’s largest oil producer devalued the naira by more than a third against the dollar at the end of January, seven months after previously allowing it to depreciate, as it moves toward a fully floated currency and to close the gap with the parallel-market rate to woo investors.
The currency’s decline has had a marked effect on inflation because the nation imports a quarter of its food and nearly all of the fuel consumed domestically. – Bloomberg
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