Nigerian inflation has soared to its highest level since June 2010, placing mounting pressure on the country’s central bank to raise interest rates despite an economic slump.
Consumer prices rose across all sectors, driven by higher energy prices and food price growth, which rose at a rate of 13.2 per cent last month, according to the country’s statistics agency. writes Mehreen Khan.
Urban inflation rose by 15.1 per cent, while rural prices were up by 12.8 per cent in April, compared to the same period last year.
Nigeria’s currency peg with the dollar has come under sustained pressure as oil prices have languished around $40 a barrel.
Investors are now betting the government will have to engineer a devaluation with the forward non-deliverables market for the naira falling to a 16-week low against the dollar.
Investor eyes will now turn on the central bank when it gathers for its latest policy decision next week. Record inflation could see policymakers forced to raise interest rates to curb price growth, said Razia Khan at Standard Chartered.
But with growth slowing, “the weakness of the economy, and less effective monetary policy tools, there are no easy answers”, she said.