Nigeria’s accelerating inflation, which has been compounded by surging commodity prices stemming from the war in Ukraine, may push an additional 15 million people into poverty by year end, according to the World Bank.
Inflation in the West African nation quickened more than expected to an 11-month high in May, suggesting price pressures are becoming entrenched in the economy.
Consumer prices rose 17.7% from a year earlier, compared with 16.8% in April, according to data released on the National Bureau of Statistics’ website on Wednesday.
That topped the median estimate of 17.5% from six economists in a Bloomberg survey. Food and gasoline were the largest contributors. Prices climbed 1.78% over the previous month.
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The inflation rate has breached the 9% ceiling of the central bank’s target band for almost seven years and may be on a galloping trend, something the monetary policy committee said in May it aimed to prevent with its first rate increase in six years.
If sustained, the MPC may be prompted to increase the key rate again on July 26.
Prices of food and non-alcoholic beverages which make up more than half of Nigeria’s inflation basket have risen sharply in the last month.
Annual food-price growth accelerated to 19.5% from 18.4% in April and core inflation, which strips out the more volatile food and energy components, quickened to 14.9% in May, compared with 14.2% a month prior.
While Africa’s largest economy faced inflationary pressures before Russia’s invasion of Ukraine, increased living costs caused by the war will push even more Nigerians into poverty, the World Bank said in its Nigeria Development Update report published Tuesday.
“Overall, the “inflation shock” is estimated to result in about 15 million more Nigerians living in poverty between 2020 and 2022,” the lender said.
Unlike its peers around the world, the Central Bank of Nigeria was late in tackling inflation, only starting lift-off at its last monetary policy meeting in May, the World Bank said. Nations from South Africa to Ghana began increasing rates in November.
“Our forecast for the average inflation rate in 2022 has been revised upwards from 13.5% to 15.5%,” the lender said.
