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Nigeria’s inflation rises four consecutive months to 8.2%

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Nigeria’s inflation rose 0.2 percentage points to 8.2 percent in June, the fourth consecutive year-on-year increase in the headline index since the price easing seen in February.

The National Bureau of Statistics (NBS) reported that the inflation number rose against the 8.0 percent recorded in May, pushed by increases in all divisions that contribute to the index- including food and core sub-indices.

Specifically, food prices edged to 9.8 percent from 9.7 percent in June, pushed by higher prices in the bread and cereals, meats, fish, and dairy groups.

In its latest Consumer Price Index report, the NBS noted that while food prices have increased for the fourth consecutive month (year-on-year), the pace slowed at 9.4 percent within the first half of the year, indicating a 0.5 percentage points lower relative to the first half of 2013.

On a month-on-month basis, food prices increased at the same rate of change for three consecutive months by 0.8 percent.

The Bureau, however, noted that price increases in the food sub-index were weighed down by relatively slower increases in the oils and fats, fruits and vegetable groups.

But prices captured by the core sub-index moved even faster in June, rising by 8.1 percent (year-on-year), 0.4 percentage points higher from the rate recorded in May.

Those increases were observed in all non-food divisions which contribute to the core sub-index, the data office also stated.

On a month-on-month basis, prices also increased at the fastest rate for the year, increasing by 0.7 percent.

This was marginally higher from 0.6 percent rate recorded in May.

“The increase in the core sub-index (month-on-month) was as a result of price increases across various group items in particular electricity prices, jewellery, clocks and watches, furniture repair prices, NBS stated in the report.

For fourteen consecutive months, the Central Bank of Nigeria (CBN) has succeeded in keeping inflation within its 6-9 percent target using some tight monetary measures. But it signaled that core inflation could pose a threat for monetary policy, especially as it continued to show conflicting signals since January.

The CBN will meet early next week to re-consider rates which it kept flat in May with the conviction that it was succeeding in keeping price and exchange rate stable, defined by its tight indicative benchmark range.

But Governor Godwin Emefiele had signaled a gradual reduction in interest rates to spur lending to the real sector, however, the recent creeping in of both food and core inflation, analysts say could make the CBN still vote to hold on to tight monetary stance, especially in the face of prevailing threats.

Article Credit: Businessdayonline

Updated 5 Years ago

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Tags:     NBS     CBN     Governor Godwin Emefiele