Nigeria inflation drops in May

Nigeria’s consumer inflation dropped to 12.7 per cent year-on-year in May, from 12.9 per cent in April, according to data released by the National Bureau of Statistics. This may encourage central bank to keep interest rates on hold in the near term.

Nigeria’s central bank targets consumer inflation in single-digits but has accepted that the headline figure is likely to peak at around 14 per cent later this year. The Central Bank monetary Policy Committee last month kept its benchmark interest rate on hold at 12 per cent for the fourth month running, citing the need to balance inflationary concerns with slowing economic growth.”Given the slowdown in real GDP growth, and the weakness in monetary aggregates, Nigerian interest rates are likely comfortably on hold for the rest of the year,” Razia Khan, Head of Africa Research at Standard Chartered, said in reaction to the inflation figures.

Food inflation rose sharply to 12.9 per cent year-on-year in May, from 11.2 per cent the previous month, the National Bureau of Statistics (NBS) report said. “The high year-on-year change could be partly attributable to persistent increases in the prices of some farm produce due to the farming season. Core inflation, which excludes volatile agricultural produce also rose to 14.9 per cent in May, from 14.7 per cent in April.