ECONOMYTOP STORY

Inflation in Nigeria rises to 11.61% in October, highest in 17 months

 

The Consumer Price Index (CPI), which measures inflation, again rose to 11.61 per cent (year-on-year) in October 2019 compared to 11.24 per cent in the preceding month, according to the National Bureau of Statistics (NBS). That is the highest rate since May 2018.

Food inflation quickened to 14.1 per cent from 13.5 per cent in September. That is the highest rate since April last year. Costs have been pushed up by the border closures that President Muhammadu Buhari ordered to curb smuggling of rice and other commodities.

Also, core inflation, which excludes the prices of volatile agricultural produce, however, slowed to 8.88 per cent (year-on-year) in October, compared to 8.94 per cent recorded in the preceding year.

The faster price growth will increase the spread between the inflation rate and yields on one-year Treasury bills even further. This will have a negative impact on local funds which have been restricted from investing in the central bank higher-yielding securities.

Prices are likely to increase even faster in the next two months as consumer demand and spending rise over the Christmas season.

According to Bloomberg, the uptick in inflation will give more reason for the Central Bank of Nigeria to hold its key rate next week as pressure on the naira persists.

“While the Monetary Policy Committee wants to boost growth, it unanimously voted to hold the rate at 13.5% in September, saying lowering the key rate would result in increased system liquidity and “heighten inflationary tendencies in the economy.”