Nigeria’s inflation rate eased in October for the seventh month running, as rises in prices of food and non-food items slowed.
This was according to the data obtained from the statistics office on Monday, a week before the central bank makes a decision on interest rates.
Inflation, which has been in double digits since 2016, eased by 0.64 percentage points to 15.99 per cent in October, the office said.
That slowing “will bolster the case for policymakers to keep their benchmark interest rate on hold in order to support economic recovery,” Virag Forizs, emerging markets economist at Capital Economics, wrote in a note.
Rating agency Fitch said it still needed to see a durable and continued moderation in inflation rate towards the central bank’s target of 6-9 per cent among other factors for its view on Nigeria to be positive.
Food price inflation, the major headline component, declined by 1.23 percentage points in October to 18.34 per cent, according to the statistics office.
Core inflation, excluding prices of farm produce, rose 2.10 percentage points to 13.24 per cent.
The government has said the persistent inflationary pressures are structural – linked to deficits and not solely a money supply issue – and largely imported.
“It would be premature for anyone to signal the all-clear on Nigerian inflation, given these structural factors that await resolution,” Razia Khan, chief economist for Africa and the Middle East at Standard Chartered, said.
Nigeria imports many key goods and services. A dollar shortage has prompted the government to put restrictions on forex for certain items, keeping the pressure on prices.
Mari Pangestu, the World Bank’s Managing Director of Development Policy and Partnerships, told Reuters on Friday that macro-economic stability was key to resolving Nigeria’s development issues and that getting the Naira’s exchange rate in the “right place” was important.