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% from a year earlier, compared with 16.8% in April, according to data released on the National Bureau of Statistics’ website on Wednesday. That topped the median estimate of 17.5% from six economists in a Bloomberg survey. Food and gas were the largest contributors. Prices climbed 1.78% over the previous month.
The figure suggests inflation that has breached the 9% 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% from 18.4% in April and core inflation, which strips out the more volatile food and energy components, quickened to 14.9%, compared with 14.2% a month prior.
