By Jeph Ajobaju, Chief Copy Editor
Annual inflation rose in Nigeria for the fifth straight month to 12.13 per cent in January, from 11.98 per cent in December, and food price index shot up to 14.85 per cent from 14.67 per cent.
The inflation rate was the highest in nearly two years.
Higher consumer inflation means it costs more to buy food, especially because land borders are closed to check smuggling of staple items like rice and flour.
“This rise in the food index was caused by increases in prices of bread and cereals, meat, oils and fats, potatoes, yam and other tubers and fish,” the National Bureau of Statistics (NBS) said in its latest report.
Land borders were closed in August 2019 to stop smuggling of rice and other goods, but economists argue the move has stoked inflation.
Nigeria Customs Service Comptroller General, Hameed Ali, confirmed in October that all trade in goods through land borders had been halted indefinitely.
Consumer inflation rate in January was the highest since April 2018, when it stood at 12.48 per cent.
Inflation had dropped to its lowest in almost four years in August 2019 but has risen steadily in the wake of the border closures.
The Central Bank of Nigeria (CBN) says it expects to keep monetary policy tight in 2020 to combat inflation and support the naira amid slow growth.
CBN targets single-digit inflation but held its main interest rate at 13.5 per cent at its last meeting in January.
The figures released by the NBS coincide with report by the International Monetary Fund (IMF) which lowers its 2020 growth forecast for Nigeria to 2 per cent from 2.5 per cent, on speculation the coronavirus outbreak in China may hit oil demand.
Nigeria has been grappling with low growth since its recession ended in 2016. And investors are still waiting for polices to back up promise by President Muhammadu Buhari to revive the economy.
Nigeria’s growth rose to an annual rate of 2.28 per cent in the third quarter of 2019 after production of its main export, crude oil, rose to a more than three-year high, according to Reuters.
On February 18, however, oil prices fell below $57 a barrel, pressured by concerns the coronavirus outbreak could reduce demand in China and by a lack of further action by OPEC and its allies to support the market.
The IMF said growth was still recovering, but inflation was rising which, along with external shocks, would weaken Nigeria’s foreign exchange reserves due to its deteriorating terms of trade and capital outflows.
“Under current policies, the outlook is challenging,” the IMF said in a statement, following a consultation with the government and CBN officials, as well as banking and private sector representatives.
“Structural reforms … remain essential to boosting inclusive growth.”
