Nigeria’s inflation eases to 23.71%, reducing possible rate hike

Nigeria’s consumer price inflation decelerated in April, driven by a gradual slump in food prices like maize, wheat, yam and wheat. This trend reverses the marginal uptick in March, reducing any possible pressure to raise interest rates at the next rate-setting meeting.

Headline inflation eased to 23.71% year-on-year in April, down from 24.3% recorded in March, according to data released by the National Bureau of Statistics (NBS) on Thursday. On paper, the decrease is a relief but the realities

Core inflation, which strips out the volatile prices of agricultural produce and energy, stood at 23.39%. This figure highlights the broad-based nature of the price increases, significantly influenced by upward revisions to utility tariffs and communication service charges.

While food inflation marginally increased to 21.26% in April compared to the previous month, the decline was not substantial enough to provide meaningful relief to the overall headline number, noted Samuel Oyekanmi, an analyst at Norrenberger.

“Food prices, which typically act as a counterbalance to core inflation movements, have not seen any meaningful decline during the period under review. The absence of a downward trend in food inflation limits any potential relief on the headline number,” he added.

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Beyond currency pressures, elevated costs for essential services like electricity tariffs, fuel, and internet data continue to weigh on the core inflation basket. These expenses consume a growing portion of household budgets and contribute directly to the rising cost of doing business.

Analysts widely anticipate the central bank holding rates for a second consecutive time, as it did in February, owing to reduced consumer prices and rebased inflation figures.

Looking ahead, economists suggest that while the pace of increase might slow, headline inflation is likely to remain elevated in the near term, potentially ticking slightly higher in May before any potential stabilisation in the latter half of the year. The trajectory will heavily depend on the CBN’s ability to maintain a stable exchange rate and the impact of any further government policies on energy and utility prices. The World Bank is optimistic of a 22.1% annual rate in the interim.