Nigerian inflation accelerated to the highest rate in almost 11 years in June, adding pressure on policy makers to increase borrowing costs.
The inflation rate in Africa’s largest economy increased to
16.5% from 15.6 in May, the Abuja-based National Bureau of Statistics said in an e-mailed statement on Monday.
That’s the highest rate since October 2005, according to data on the Central
Bank of Nigeria’s website. Prices
rose 1.7% in the month.
The median of seven economist estimates compiled by Bloomberg was for inflation to quicken to 16.2%.
Nigeria imports at least 70% of its refined fuel, despite pumping 1.6 million
barrels of crude a day according to the International Energy
Agency, and faced fuel shortages as retailers struggled to get foreign currency to buy product
during a 15-month naira peg that was removed last month.
The currency’s official exchange rate weakened to more than 280 per dollar, compared with the
fixed rate of 197-199, and the naira trades at around 360 on
the black market, increasing prices for consumers.
“We see inflation averaging in the mid 20% by year-end,
mainly because of the foreign- exchange rates,” Yvonne
Mhango, an economist at Renaissance Capital Ltd. said by phone from Johannesburg
before the data was released.
Food prices rose 15.3% in June from a year earlier, compared with 14.9% in May. The highest increases were in the costs of fish and meat, fruit and vegetables and bread and cereals, the statistics office said.
The International Monetary Fund said this month Nigeria’s
economy could contract for the first time in more than two decades this year as a fall in oil revenue and electricity shortages
weigh on output.
product contracted by 0.4% in the three months through March as the naira peg and restrictions on trading foreign currency led to a
shortage of dollars needed to import fuel and materials for
The Central Bank of Nigeria, which kept its benchmark rate at
12% in May, will announce its next policy decision on June 26