Nigeria’s annual inflation rate accelerated to an 18-year high of 25.8% in August, official data showed on Friday, as Africa’s largest economy grapples with rising prices ahead of a central bank interest rate decision later this month.
President Bola Tinubu in May removed a popular but costly decades-old petrol subsidy and ended exchange controls, leading to a spike in prices from food to transport fares and angering unions who have threatened strikes.
The August inflation figure rose for an eighth straight month from July’s 24.08%, according to the National Bureau of Statistics (NBS), compounding a cost of living crisis worsened by Tinubu’s reforms.
The last time Nigerians experienced this level of inflation was in August 2005, official data shows.
“Nigerian inflation rose faster than expected in August, a month that more typically sees seasonally subdued inflation pressures,” said Razia Khan, Standard Chartered managing director and chief economist, Africa and Middle East
Economic analysts said naira depreciation, higher fuel and food prices, logistics costs and money supply growth, were some of the major drivers of Nigeria’s inflation.
“The inflation data in our view reflects only in part the lifting of the subsidy. Much of the pre-existing pressure came from Nigeria’s monetary policy stance in the months that preceded this outcome, and the continued naira depreciation on the parallel market,” Khan said.
The central bank raised rates by a smaller-than-expected 25 basis points in July, contrary to analysts’ expectations. It is due to set rates again on Sept. 26 and some analysts expect a more hawkish stance.
Food inflation, which accounts for the bulk of Nigeria’s inflation basket, rose to 29.34% in August from 26.98% in July, as price of staples rise, the NBS said.
Tinubu, whose disputed February presidential election victory was upheld by a tribunal last week, has said he will not go back on reforms. Labour unions say reforms have hurt the poor and should be reversed.