Nigeria Inflation Quickens for 11th Straight Month on Food Costs

Nigerian inflation accelerated for the 11th straight month in July as a weakened currency and continued border closures drove up food prices.

Consumer prices climbed 12.8% from a year earlier, compared with 12.6% in June, Abuja-based National Bureau of Statistics said in a report published Monday on its website.

Key Insights

  • A drop in the naira added to food inflation that’s already been pushed up by border closures and clashes between herders and farmers. The food index, which accounts for more than half the inflation basket, rose 15.5%, compared with 15.2% in June. That’s the fastest increase since March 2018.
  • The central bank’s move to block access to foreign exchange for corn imports to try boost local production increased costs further and means industries that use the grain now have to rely on the parallel market, where the naira sold at 475 per dollar on Monday. That’s adding pressure to food-price growth in the country of nearly 200 million people.
  • The central bank weakened the naira’s official rate by 5.3% to 379 per the dollar this month as it tries to unify multiple exchange rates to improve the transparency of the currency-management system.
  • Price growth has been above the central bank’s target band of 6% to 9% for more than five years, and shows no signs of abating as borders with Nigerian neighbors remain shut on President Muhammadu Buhari’s orders. The steps were first announced 12 months ago to stifle smuggling of rice and other products.