Nigeria’s inflation slowed for the third consecutive month in April as gasoline prices declined.
The inflation rate in Africa’s most-populous nation fell to 17.2 percent from 17.3 percent in March, the Abuja-based National Bureau of Statistics said in an emailed statement Tuesday. The median of 16 economist estimates in a Bloomberg survey was for the rate to decrease to 16.9 percent. Prices rose 1.6 percent in the month, while food prices climbed at a slower pace in March.
Inflation accelerated every month for more than a year until January, partly because import prices increased due to dollar shortages and a weakening of the naira fueled by falling revenue from oil, the nation’s biggest export, and the removal of a currency peg in June. The central bank introduced a window where portfolio investors could trade foreign currency at market-determined rates and has increased its sales of foreign-exchange to banks after severe rationing last year.
“Given the increased availability of foreign currency, we expect inflation to fall from its 2016 level” over the next 12 to 18 months, Moody’s Investors Service said in a emailed report on May 10. Price growth will “remain high at 13 percent,” Moody’s said. The government targets inflation at 6 percent to 9 percent.
Average gasoline price dropped 8 percent from the previous year, and increased 0.3 percent compared with a month earlier, the statistics office said in a separate report.
The decline in Nigerian consumers’ purchasing power slowed investment and forced the central bank to increase its benchmark rate to a record 14 percent in July even as the economy was contracting. The Monetary Policy Committee is scheduled to review its key rate on May 23.
“At this month-on-month rate, we could be looking at another 18 percent rate,” by the end of the year, Pabina Yinkere, an analyst at Vetiva Capital Management said on Twitter.
Nigeria’s economy, which vies with South Africa’s to be the largest on the continent, shrunk by 1.5 percent last year, the first full-year contraction in a quarter of a century. A recovery in the oil sector and a 7.4 trillion-naira ($23.6 billion) budget approved by lawmakers last week may help boost gross domestic product. Output will probably expand by 0.8 percent this year, according to the International Monetary Fund.