- Consumer Prices Improve Slightly to 17.24%
The cost of goods in Africa’s largest economy improved for the third consecutive month in April.
According to the data released by the National Bureau of Statistics, NBS, the consumer price index (CPI) which measures inflation improved from 17.26 percent (year-on-year) recorded in March to 17.24 percent in April. Suggesting that the cost of goods have started moderating following a series of foreign exchange policy being implemented to curb escalating exchange rates and close the gap between the official window and the parallel market.
On a monthly basis, the consumer prices declined by 0.02 percent, slightly lower than the 0.52 percent decline recorded in March when the inflation rate was 17.26 percent.
However, the Central Bank of Nigeria which has sold about $4 billion so far introduced a new forex window in April to ensure that exporters and investors access foreign exchange at a market determined rate.
Ever since the new forex platform was floated, business confidence has surged to a new height, prompting both the local and foreign investors to increase their investment holdings. A move that has bolstered Nigerian Stock Exchange index to a 9 month high and position Nigeria as one of the 2018 investment destinations, barely a month after the new forex window was launched.
“The consumer prices and foreign exchange market have started exhibiting similar characteristic, the rate of decline is no longer proportional to the CBN intervention,” said Samed Olukoya, a foreign exchange research analyst at Investors King Ltd. “Therefore, the CBN has to address the fundamental factors impeding forex rate from improving below N388/$ even after about $4 billion has been sold to reduce illiquidity in the forex market.”
Speaking further, he said: “The rate of moderation of the consumer prices has started stalling, meaning we might not see significant improvement henceforth unless the CBN address those underlying factors.”
The CBN inject another $457 million into the forex market on Monday.