Nigerian inflation eases in September as food price rises slow - REUTERS
By Chijioke Ohuocha
ABUJA (Reuters) -Nigerian inflation eased for the sixth month running in September as a rise in prices for both food and non-food items slowed, creating room for the central bank to focus on supporting the currency and the economy.
Inflation, which has been in double digits since 2016, eased by 0.38 percentage points to 16.63% in September, the statistics office said on Friday. Price increases peaked in March due to COVID-19 disruptions, currency devaluations and security issues in food producing regions.
Africa's most populous and largest economy relies on imports for consumption. But dollar shortages resulting from low prices for oil, its main export, and disruptions linked to COVID-19, has harmed imports as forex access for certain items are curbed.
Analysts say currency weakness has had a pass-through effect on imports.
"Currency weakness hurts purchasing power of the people," Simon Harry, head of National Bureau of Statistics said.
On Monday, Vice President Yemi Osinbajo urged the central bank to rethink its demand management policy, which it has used to restrict imports in an attempt to manage pressure on the currency.
Nigeria has several exchange rates operating in parallel, a system put in place during a 2016 oil price crash because the government was seeking to avoid a large official devaluation of the naira as a matter of national pride.
However, the naira has lost 15.1% on the black market, where it trades more freely since central bank's ban of dollar sales to retail currency operators in July. This has pushed up cost of imports for raw materials and machineries, analysts say.
The government has said inflation is structural, linked to deficits and not solely a money supply issue, and largely imported.
Food price inflation, the major headline component, declined by 0.73 percentage points in September to 19.57%, the statistics office said. Core inflation, excluding prices of farm produce, rose 0.33 percentage points to 13.73%.
With inflation slowing, analysts expect the central bank to maintain its dovish stance in November.
"The drop in the headline inflation rate ... will ease pressure on the central bank to raise rates and allow policymakers to focus on supporting the economic recovery," said Virag Forizs, emerging markets economist at Capital Economics.
(Reporting by Chijioke Ohuocha; Editing by Catherine Evans, Toby Chopra, Kirsten Donovan)