Nigeria's inflation hits 28-year high as yet another rate hike looms
TLDR
- Nigerian inflation hits 28-year high at 31.7%, prompting fears of 10th consecutive interest rate hike.
- Consumer prices rose by 3.1% in February, with food inflation spiking to 37.92%, impacting staple prices.
- Central Bank raised interest rates to 22.75% amidst challenges of currency depreciation and cost of living.
Nigerian inflation surged to a 28-year high in February, reaching an annual rate of 31.7% after authorities allowed the naira to weaken once more. This development has raised concerns about a potential 10th consecutive interest rate hike by the end of this month.
According to data from the National Bureau of Statistics published on Friday, consumer prices rose by 3.1% during the month, contributing to the overall increase. Food inflation also spiked sharply to 37.92%, making staples like bread and yam even more expensive for consumers.
The Central Bank responded to the inflationary pressures by raising interest rates to 22.75% in its first meeting since 2023, underscoring the challenges faced by policymakers in managing price stability amidst currency depreciation and rising costs of living.
Key Takeaways
The decision by the Central Bank to raise interest rates to 22.75% during its first meeting since 2023 was widely interpreted as a signal of the institution's commitment to tackling inflation. Despite being a tough call, such decisions are now showing promising results. Recent data released by the regulator indicates a notable increase in foreign inflows, which reached $2.3 billion in February. This uptick can be attributed to renewed interest from foreign investors and a rise in overseas remittances. Impressively, this first-quarter figure of 2024 outperformed the total of $3.9 billion received throughout 2023, signaling growing confidence in Nigeria's economic outlook amidst efforts to stabilize the financial landscape.
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