Analyst See Nigeria’s MPC Raise Policy Rate by 50bps to Curb Rising Inflation


The National Bureau of Statistics (NBS) has followed up its release of September’s inflation numbers with the publication of its price watch series. Except for a brief pause in Dec ’22, Nigeria’s inflation reading has steadily increased since Feb ’22. The most recent inflation reading showed that the headline inflation climbed by 92bps to 26.72% y/y in September, a moderate pace of increase compared to an acceleration of 172bps to 25.80% y/y in August. The headline rate was driven by increases of 130bps and 69bps in the food and core measures to 30.64% y/y and 21.84% y/y, respectively. Today, we examine data from the price watch series with a view to taking a closer look at some of the drivers of inflation.

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In the selected food price watch for September, we see that all 43 food items surveyed recorded y/y price increases.

An unweighted simple average, which does not account for consumption trends, indicates that the average price of food items in the Bureau’s designated basket increased by 39.0% y/y and 1.6% m/m. These compare with the prior month’s unweighted average price increase of 40.2% y/y and 4.2% m/m, respectively.

Due to Nigeria’s high demand for imports, the depreciation of the naira exchange rate has significantly impacted key components of Nigeria’s inflation basket.

Consequently, imported inflation has remained elevated. September’s reading showed that it surged by 155bps to 21.72% y/y, a faster pace of increase than the 23bps rise to 20.17% y/y the previous month.

Notably, the average price of premium motor spirit (PMS/petrol) increased markedly by 227% y/y to c.NGN626/litre in June, following the deregulation of petrol prices.

Prices of other deregulated fuels, such as automotive gas oil (diesel), and household kerosene increased by 37.1%y/y and 12.8% y/y to NGN890.8/litre and NGN1,299.0/litre, respectively.

Consequently, the rise in fuel prices has resulted in higher transportation costs. According to the NBS transport watch series, the average fare paid by commuters for both intra and inter-city bus trips accelerated by 117.3% and 56.1% y/y to NGN1,337.8 and NGN5,917.2, respectively.

However, on a slightly positive note, The NBS report on Liquefied Petroleum Gas (LPG) prices watch reveals that the average cost of refilling a 12.5kg cylinder decreased by -6.7% y/y to an average of NGN9,247.4 in September ’23.

At its last meeting held in July, the monetary policy committee (MPC) raised its interest rates by 25bps to 18.75% and lowered the asymmetric corridor to +100/-300bps (vs. +100/-700bps) to curb the sustained rise in headline inflation.

To sustain its continuous efforts in curbing the persistent rise in inflation, we expect the MPC to raise the policy rate by 50bps at its upcoming monetary policy meeting.

Bisi Adesina
Bisi Adesina
Akinlabi Bisola is a health and meds journalist with a deep background in Public Health Education and with a B.Sc in Health Education and Masters in Public Health Educator. You can catch up on her articles on her website

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