Inflation declines first time in three months

Nigeria’s inflation rate declined for the first time in three months in October even as food-price growth accelerated.

The consumer-price index rose 11.26 per cent from a year earlier compared with 11.28 per cent in September, the National Bureau of Statistics (NBS) said yesterday. The median estimate in a Bloomberg survey was for 11.4 per cent. Prices increased 0.7 per cent in the month.

The Central Bank of Nigeria (CBN’s) Monetary Policy Committee (MPC) is due to announce a decision today on its key policy rate, which is at a record-high 14 per cent. Most analysts expect the committee to hold it despite inflationary pressures.

Food prices climbed 13.3 per cent from a year earlier, a third month of acceleration.

Price growth in the country has been above the central bank’s target band of 6 percent and nine perc ent for more than three years.

Inflation in Africa’s largest oil producer slowed for 18 straight months through July.

Growth in consumer prices could average 12.4 percent this year, according to the International Monetary Fund.

To keep a lid on inflation, the CBN has held its main lending rate at 14 per cent since July 2016.

Late disbursements from this year’s budget of N9.1 trillion ($25 billion) and election-related spending before the February vote may quicken price growth, CBN Governor Godwin Emefiele, has said.

The apex bank’s MPC is expected to hold the key rate at 14 per cent today according to the median estimate of seven economists in a Bloomberg survey.

“It’s a difficult call for the MPC to make tomorrow, having to juggle with rising inflation, muted growth and tighter monetary policy in the U.S.  We believe for now, the CBN will keep rates unchanged until after the election to assess where inflation will be going over the next few months,” said Celeste Fauconnier, an analyst at Rand Merchant Bank unit, said in an emailed response to questions.

President Muhammadu Buhari, whose policies on the economy, security and the fight against corruption have had mixed results, will seek a second mandate.

“The MPC has become more hawkish since the middle of the year as inflationary pressures seem to have picked up, but we don’t think inflation is at a point where it feels the need to hike,” Yvonne Mhango, sub-Sahara Africa economist at Renaissance Capital said by telephone from Johannesburg.

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