Nigeria Inflation Hit 32.7% in September On Fuel Price Surge, Flooding
TLDR
- Nigeria's annual inflation rate increased to 32.7% in September, driven by rising gasoline prices and severe flooding in key food-producing regions.
- Fuel prices surged by 45% in early September, impacting haulage and passenger fares, while floods in northern Nigeria destroyed crops.
- Food inflation reached 37.8%, while core inflation slightly slowed to 27.4% as the Central Bank raised its benchmark interest rate to 27.25% to combat inflationary pressures.
Nigeria’s annual inflation rate rose to 32.7% in September, up from 32.2% in August, marking the first increase in three months, driven by rising gasoline prices and severe flooding in key food-producing regions.
Fuel prices surged by 45% in early September, significantly impacting haulage and passenger fares. Simultaneously, floods in northern Nigeria destroyed crops that could have fed 8.5 million people for six months, according to estimates from the United Nations’ Food and Agriculture Organization.
Food inflation rose to 37.8%, while core inflation, which excludes agricultural produce and energy, slightly slowed to 27.4% from 27.6%. The Central Bank in September raised its benchmark interest rate to 27.25% in a preemptive move to combat inflationary pressures and may consider further hikes at its upcoming Monetary Policy Committee (MPC) meeting in November.
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Key Takeaways
Nigeria’s rising inflation, fueled by soaring fuel costs and agricultural disruptions from flooding, presents a challenging environment for the CBN. While the central bank may opt to raise rates again in November to stabilize prices and attract investment, the risk of overheating the economy remains a concern for policymakers. Experts warn that maintaining the status quo may be considered to prevent economic overheating and a potential recession.
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