New government reports have shown a steady decline in the price of food for the seventh month running even as consumers claim otherwise.
Nigeria’s inflation rate reportedly fell to 15.99 percent in October compared with the same period last year and was 0.64 percent lower than September’s annualised reading, according to Nigeria’s National Statistics office said.
The drop in the headline rate was driven by easing annual food inflation, with prices falling from 19.5 percent in September to 18.3 percent in October.
On the other hand, consumers claim that food prices remain on a steady increase in the last months of the year especially prices of imported consumables.
Capital Economist, Virag Forizs in a client note on Monday cleared the air on the disparity saying that imported food inflation remained stable while locally produced food experienced a decline in price due to domestic factors.
“Domestic factors appear to be behind the drop in food price pressures; imported food inflation remained stable,” Virag Forizs noted.
Inflation has exceeded the central bank’s targeted rate of 6 percent – 9 percent for years. Forizs said that while it is like to keep edging lower over the coming months, inflation is unlikely to fall within the central bank’s target range “any time soon.”
She added that ‘increasingly distortionary” foreign exchange rules will continue to weigh on the country’s currency, the naira, which will “keep imported goods inflation high.”
Forizs also said that the downward trend would likely give the country’s monetary policymakers sufficient space to hold interest rates steady when they meet next week, rather than be compelled to increase them to cool rising prices – a move that could also weigh on economic growth in Africa’s largest economy.