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Nigeria inflation rises further in October, upping pressure on new head

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Thursday, November 16th, 2023
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Nigerian inflation rose for the tenth month in a row in October, increasing pressure on the new central bank governor to raise interest rates when the monetary policy committee meets for the first time since his appointment.

Consumer inflation rose to 27.33% year on year in October from 26.72% in September, its highest in about 18 years, data from the National Bureau of Statistics showed.

Olayemi Cardoso took over as governor of Nigeria’s central bank in September, after Godwin Emefiele was suspended earlier in the year.

Cardoso has pledged to pull the bank back from much-criticised fiscal interventions pursued by Emefiele that undermined the central bank’s ability to effectively manage inflation. Instead, the central bank will take a “more limited advisory role” in support of the government’s economic growth agenda, Cardoso said.

Price rises for food and non-alcoholic beverages were the biggest driver of inflation in October in annual terms, the statistics bureau said.

Food inflation, which accounts for the bulk of Nigeria’s inflation basket, rose to 31.52% in October from 30.64% in September.

Inflation in Africa’s biggest economy and most populous nation has been in double digits since 2016, eroding incomes and savings.

“We are reaching almost four months since the central bank’s last policy meeting in July, a meeting which underwhelmed,” said David Omojomolo, Africa economist at research firm Capital Economics.

“The central bank will need to act with aggressive hikes to maintain its credibility and bring down inflation,” he said.

At the July monetary policy meeting, the central bank opted for a smaller-than-expected 25 basis point hike, saying it preferred a moderate increase to anchor inflation expectations while continuing to support investment.

President Bola Tinubu, who has embarked on some of Nigeria’s boldest reforms in decades, has been under pressure from labour unions as some of those reforms have contributed to price pressures.

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