In January, Nigeria's inflation rate surged to almost 30% annually, driven by soaring food prices and the depreciation of the country's naira currency to record lows. Economists speculate that this data could prompt the central bank to implement a significant interest rate hike during its upcoming meeting.
According to data from the National Bureau of Statistics, consumer inflation rose for the 13th consecutive month to 29.90% year-on-year, up from December's 28.92%. This marks the highest inflation level since mid-1996, exacerbating the cost of living crisis and eroding incomes and savings.
The depreciation of the naira, which experienced a second devaluation in less than a year last month, has contributed to price pressures, along with energy and logistics costs associated with infrastructure challenges.
In January, the food and non-alcoholic beverages category was the primary driver of inflation, with food inflation increasing to 35.41% from 33.93% in December.
Vice President Kashim Shettima announced plans to establish a commodity board to regulate the prices of grains and other items, aiming to curb food costs and support smallholder farmers who dominate production.
Central bank governor Olayemi Cardoso faces pressure to raise interest rates during the Monetary Policy Committee (MPC) meeting later this month, the first meeting since he assumed office in September. Cardoso aims to reduce inflation to around 21% and stabilize the naira.
“We expect the central bank to finally deliver a large interest rate hike, probably in the region of 400 basis points to 22.75%, when the MPC meets towards the end of this month,” stated Jason Tuvey at Capital Economics.