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Nigerian Inflation Unexpectedly Slows Before Rate Decision - BLOOMBERG
By Nduka Orjinmo
Nigerian inflation unexpectedly slowed in January, providing room for policymakers to resume their rate-cutting cycle next week.
The consumer price index rose 15.1% year-on-year, compared with 15.2% in December, data published by the National Bureau of Statistics on Monday showed. The median estimate of four economists in a Bloomberg survey was 19.5%. Prices fell 2.9% in the month, after rising 0.5% in December.
The slowdown was driven largely by lower food prices — including staples like cooking oil, grains and legumes — which helped offset still-elevated underlying inflation.
Food inflation cooled to 8.89% from 10.8%, while core inflation eased to 17.7% from 18.6%.
Monday’s data is the second release since the statistics office revised the reference period for prices last month, using a 12-month reference period, with the average CPI for 2024 set to 100, to avoid an artificial spike.
The moderation in inflation gives policymakers additional scope to cut rates at their first meeting of the year on Feb. 23, with a decision due the following day, after leaving the benchmark rate at 27% in November. The case for easing is bolstered by an almost 7% appreciation in the naira against the dollar since the start of the year and foreign reserves that remain robust at $47.8 billion.
Still, Governor Olayemi Cardoso has warned of the risks of increased spending before general elections scheduled for early next year, telling a room full of politicians at the presidential villa that excess cash in the banking system poses a threat to price stability that needs to be managed carefully.
“Typically in an election cycle, a lot of money gets pumped into the system,” he told a meeting convened by the president with state governors on Feb. 9. “This has to be watched to ensure that it does not destabilize and challenge the very, very bold reforms which have brought about the stability to the economy.”
