Nigeria inflation quickens to fastest pace in almost 6 years

Nigerian inflation accelerated for a sixth consecutive month in April and at the highest pace since August 2010, after an increase in gasoline and electricity prices in Africa’s largest economy.

The inflation rate rose to 13.7 percent from 12.8 percent the month before, the Abuja-based National Bureau of Statistics said in an e-mailed statement, the same median estimate of 14 economists surveyed by Bloomberg. Prices rose 1.6 percent in the month.

Rising fuel and electricity prices “were the largest contributors,” the statistics agency said on Monday. “These items as well as other imported items continued to have ripple effects across many divisions.” Food inflation rose to an annualized 13.2 percent from 12.7 percent in March.

The Nigerian central bank has pegged the naira at 197-199 per dollar since March last year and restricted trading in foreign currencies, making imports more costly for a nation that’s a net importer of food and refined fuel. Importers struggle to access foreign exchange at the official rate, with the naira falling to about 360 per dollar on the black market. The minister of state for petroleum, Emmanuel Kachikwu, last week increased the cap on the gasoline price by 67 percent to 145 naira ($0.73) per liter (0.26 gallon).

While the official price for gasoline was 86 naira last month “people were paying much more for fuel,” John Ashbourne, a London-based economist at Capital Economics Ltd., said by phone. “Now that it’s been increased that will add more inflation pressure and more and more pressure on the central bank to increase interest rates, which I think it will do next week.”

The nation imports at least 70 percent of its refined fuel, despite pumping 1.4 million barrels of crude a day, and faces fuel shortages. The government said increasing the price of gasoline could help ease shortages across the country, which were partly caused by the naira peg.

The inflation rate “may make the MPC members vote in support of an increase in interest rates,”  Babajide Solanke, an analyst at Lagos-based FSDH Merchant Bank Ltd., said in an e-mailed statement before the announcement. The committee, which will announce its next decision on May 24, increased its benchmark rate by 100 basis points to 12 percent in March.

The International Monetary Fund forecast Nigeria’s economic growth rate will drop to 2.3 percent this year as falling crude prices hit the West African country.