Africa

Consumer prices rose an annual 31.7% from 29.9% in January, the National Bureau of Statistics said Friday.

Image: Bloomberg

Nigerian inflation surged to a 28-high in February after the authorities allowed the naira to weaken again, raising the specter of a 10th straight interest-rate hike at the end of this month.

Consumer prices rose an annual 31.7% from 29.9% in January, the National Bureau of Statistics said Friday in a statement published on its website. The median estimate of five economists in a Bloomberg survey was for a 31.3% increase. Prices advanced 3.1% in the month.

To combat inflation and support the currency, the central bank will likely raise interest rates again at its March 25-26 monetary policy committee meeting. Last month, the MPC at its first meeting since July increased the minimum cash reserve ratio for banks to 45% from 32.5% and lifted borrowing costs by 400 basis points to 22.75% to help curb naira liquidity and contain pricing pressures

What Bloomberg Economists Say…

“Nigeria’s inflation quickened at a faster pace than expected in February, driven by a larger than anticipated jump in food and energy prices. As a result, the central bank now has no other option than to implement another sizable rate hike later this month. Front-loading rate hikes will limit inflation’s climb and establish a sub-40% ceiling.”

— Yvonne Mhango, Africa economist

Africa’s largest oil producer devalued the naira by more than a third against the dollar at the end of January, seven months after previously allowing it to depreciate, as it moves toward a fully floated currency and to close the gap with the parallel-market rate to woo investors.

The currency’s decline has had a marked effect on inflation because the nation imports a quarter of its food and nearly all of the fuel consumed domestically.

Annual food inflation quickened to 37.9% in February from 35.4% a month earlier, while core price growth — which excludes farm-produce and energy costs — accelerated to 25.1% from 23.6%.

Price spikes have fanned protests in major cities and soldiers now stand guard to prevent grain warehouses from being ransacked by desperate citizens.