Nigerian inflation accelerated for the ninth consecutive month in July, adding to pressure on the central bank to continue raising interest rates even as the economy deteriorates.
The inflation rate in West Africa’s largest economy increased to 17.1 percent from 16.5 percent in June, the Abuja-based National Bureau of Statistics said in an e-mailed statement on Wednesday. That’s the highest rate since October 2005, according to data on the Central Bank of Nigeria’s website. The median of 16 economist estimates compiled by Bloomberg was 17.3 percent. Prices rose 1.3 percent in the month.
The central bank maintained restrictions that block importers of selected items from steel products to rice from accessing the foreign currency inter-bank market even after removing a naira peg on June 20. Fuel shortages also pushed up consumer prices, adding to inflation pressure caused by the more than one-third loss in the value of the naira since it was allowed to float.
“Inflation will continue to accelerate, reaching about 20 percent later this year,” John Ashbourne, a London-based economist at Capital Economic Ltd., said before the data was released. “One of the big factors right now is the devaluation of the naira.”
Food inflation accelerated to 15.8 percent from 15.3 percent. The cost of gasoline declined to 148 naira from 149 naira in June, the statistics agency said in a separate statement.
The central bank raised its benchmark interest rate by 200 basis points to 14 percent last month to fight inflation and prop up the currency by luring foreign investors. Governor Godwin Emefiele will announce the bank’s next policy move on Sept. 20. The economy will probably contract 1.8 percent this year, according to the International Monetary Fund.