Nigerian inflation accelerated for the 12th consecutive month in October as exchange-rate pressures persisted on the prices of goods and services, complicating the central bank’s task of supporting an economy forecast to contract this year.
The inflation rate in Africa’s most populous country rose to 18.3 percent, the highest in 11 years, according to central bank data, from 17.9 percent in September, the Abuja-based National Bureau of Statistics said in an e-mailed statement Monday. Prices rose 0.8 percent from the previous month. The October inflation rate was in line with the median of 12 economist estimates compiled by Bloomberg.
Inflation has been accelerating partly due to dollar shortages caused by the plunge in the price of crude, Nigeria’s main export, since mid-2014. That pushed up import costs for consumer goods and machinery. The government has struggled to manage the economic fallout, at one point pegging the exchange rate for more than a year and recently using law enforcement to bring down the street price of dollars.
“It seems as if inflation hasn’t reached its peak,” Ogho Okiti, chief executive officer at Abuja-based Time Economics Ltd., said Monday by phone. “We may see it approaching 19 percent before the end of this year.”
Governor Godwin Emefiele kept the central bank’s key rate unchanged at 14 percent in September despite calls by Finance Minister Kemi Adeosun to reconsider a previous increase to help boost growth. Emefiele will announce the Central Bank of Nigeria latest decision on monetary policy on Nov. 22.
The October inflation number “will put yet more pressure on the central bank to tighten monetary policy,” John Ashbourne, an economist at Capital Economics Ltd. in London, said in an e-mailed note. “We expect that the bank will hike its key policy rate from 14 percent to 16 percent at its meeting next week.”
Nigeria’s economy contracted in the first half of the year as the drop in oil prices and output squeezed government revenue, and shortages of power and foreign currency weighed on output. The statistics agency will release gross domestic product growth data for the third quarter on Nov. 21. The International Monetary Fund forecast GDP will shrink by 1.7 percent this year.
Food inflation quickened to 17.1 percent in October from 16.6 percent in September, the statistics agency said. This was driven by increases in the price of bread, cereal, fish and meat. The average gasoline price was 0.3 percent lower in October than in the previous month.
The naira strengthened 0.4 percent to 314.25 per dollar by 10:19 a.m. in the commercial capital, Lagos.