Nigeria’s Inflation Declines to 11.23% in June

• Nigeria’s Inflation Declines to 11.23% in June

Prices of goods and services in Africa’s largest economy Nigeria declined for a 17th consecutive month in June, the National Bureau of Statistics reported on Monday.

The Consumer Price Index, which measures inflation rate declined from 11.61 per cent in May to 11.23 per cent in June.

Urban inflation also declined from 12.08 per cent year-on-year in May to 11.68 per cent in June, while rural inflation eased to 10.83 per cent.

The food index dropped to 12.98 per cent in June, up from 13.45 per cent recorded in May and more than 20 per cent filed over a year ago.

Since the central bank adjusted its forex policy and introduced Investors and Exporters (I & E) forex window, the ease of doing business has improved and exchange rates moderated enough to sustain declining consumer prices.

The I & E forex window hit a record $1.7 billion transactions in one week in June, further attesting to growing economic activities, especially in the manufacturing sector where the manufacturing PMI sustained growth at 56.5 in May. While this was lower than the 56.9 filed in April, the difference was attributed to a slower increase in inventories that stood at 58.7 in the said month.

However, with the introduction of Chinese Yuan by the Central Bank of Nigeria, procurement of needed inventories should improve and further deepen economic progress.

The CBN has reiterated its commitment to single digit inflation and converging exchange rates, therefore, the apex bank is expected to leave monetary policy rate unchanged in its meeting due later today in Abuja to protect capital inflows and contained exchange rates.

“With the U.S. Federal Reserve projected to increase interest rates two more times this year, it is logical for the monetary policy committee to maintain the current interest rate in order sustain capital importation and economic growth,” said analysts at Investors King Ltd.

“Trade tensions and the possibility of Saudi Arabia flooding the market with more crude oil has increased risks to emerging economies, especially commodity-dependent economies. Therefore, this is not the time to lower interest rates if economic productivity and job creation are priorities.”