Nigerian Inflation Hits 33.9%, Pressuring Central Bank to Raise Rates

BREAKING NEWSNovember 18, 2024 at 2:09 PM UTC

TLDR

Nigeria's inflation rate rose to 33.9% in October, driven by increased prices of corn, rice, and gasoline.
The Central Bank of Nigeria (CBN) has raised interest rates at 13 consecutive meetings, now at 27.25%, to combat inflation pressures.
Analysts anticipate a 100-basis-point rate hike on Nov. 26 to restore positive real interest rates and address economic impacts of inflation.

Nigeria’s inflation rate accelerated to 33.9% in October from 32.7% in September, exceeding expectations of 33.4%, according to the National Bureau of Statistics.

The rise, fueled by higher corn, rice, and gasoline prices, alongside continued currency depreciation, has intensified pressure on the Central Bank of Nigeria (CBN) to maintain its aggressive monetary tightening.

The CBN has raised interest rates at 13 consecutive meetings, bringing the benchmark to 27.25% from 11.5% in May 2022. Analysts expect a further 100-basis-point hike on Nov. 26, with Governor Olayemi Cardoso likely aiming to restore positive real interest rates and curb inflation’s impact on the economy and the naira. Food inflation rose to 39.2%, while core inflation hit 28.4%.

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Key Takeaways

Nigeria’s persistent inflationary pressures, compounded by a 45% naira depreciation in 2024, leave the CBN with little choice but to continue rate hikes. While analysts expect disinflation to resume in 2024 as fuel and currency shocks fade, a rate-cutting cycle remains unlikely in the near term. Policymakers are expected to prioritize stabilizing the naira and containing inflation to attract investment and bolster economic confidence.

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