Nigeria inflation cools for fourth consecutive month in May, nears CBN target

Nigeria’s inflation decelerated for the fourth consecutive month in May, helped by a stronger naira and favourable base effects, the National Bureau of Statistics (NBS) said Thursday.

Inflation slowed to 16.25 percent from 17.2 percent in April, the lowest in a year. The median of 10 economists’ estimates in a BusinessDay survey was for 16 percent. Prices rose 1.9 percent in the month.

Analysts say falling consumer prices is a good sign and raises confidence that the Central Bank of Nigeria (CBN) could be nearing its 11 percent inflation target for the year.

According to the NBS, core inflation eased by 1.80 percent in May to 13 percent as against 14.80 percent recorded in April .

“On a month-on-month basis, the Core sub-index increased by 1.17 percent in May, 0.07percent points higher than the 1.10 percent recorded in April,” the data office noted.

Food Inflation, however moderated to 19.27 percent, 0.03 percent points lower from the rate recorded in April of 19.30 percent.

Food sub-index increased by 2.54 percent in May, up by 0.50 percent points from 2.04percent recorded in April on a month-on-month basis.

Nigeria’s Central Bank targets to bring inflation down to between 10 and 11 percent by year end, as citizens battle high consumer prices, coupled with diminishing purchasing power.

CBN governor, Godwin Emefiele said on Tuesday that the CBN was concerned about high consumer prices and was looking at some drastic measures to further drive down rates as well as ease  inflation.

Inflation remains above the upper end of the central bank’s target band of 6 percent to 9 percent. The central bank kept its main policy rate at a record high of 14 percent in May to fight price growth and support the naira even as the economy struggles to recover from its first annual contraction in 25 years. It will next review the rate rate on July 25.

Africa’s biggest oil producer has suffered from dollar shortages for most of the period since crude prices crashed in 2014. GDP contracted 0.5 percent in the first three months of 2017.

The International Monetary Fund forecast Nigeria’s economy will expand by 0.8 percent this year compared with a 1.6 percent contraction in 2016 as output of oil, the nation’s biggest export, increases, and the government boosts spending. The country will raise expenditure by 21 percent to a record 7.4 trillion naira ($23 billion) this year, according to the budget that vice and acting President Yemi Osinbajo signed on Monday.

ONYINYE NWACHUKWU