Nigeria’s annual inflation rate fell for the fourth straight month in May, dropping to 16.25 percent from 17.24 percent in April, the National Bureau of Statistics (NBS) said in a report published on Thursday.
Inflation in Nigeria, which vies with South Africa as the continent’s largest economy, slowed to 16.25 percent from 17.2 percent in April, the Abuja-based National Bureau of Statistics said in an emailed report. The median of 15 economists’ estimates in a Bloomberg survey was for 16 percent. Prices rose 1.9 percent in the month.
A rate drop would be “mainly as a result of base effects” from a 67 percent increase in gasoline-price caps in May last year and was “despite elevated consumer prices in May,” FSDH Merchant Bank Ltd. said in an emailed note before the release according to Bloomberg. Price increases in the month “show inflationary pressure persists in Nigeria.”
Inflation remains above the upper end of the central bank’s target band of 6 percent to 9 percent. The central bank kept its main policy rate at a record high of 14 percent in May to fight price growth and support the naira even as the economy struggles to recover from its first annual contraction in 25 years. It will next review the rate rate on July 25.
The country has suffered from dollar shortages for most of the period since crude prices crashed in 2014. Investors blamed the central bank for compounding the crisis by tightening capital controls and trying to stop the naira falling, which they said contributed to the economy contracting last year.
In a move to boost investor confidence, the central bank in April introduced a window for portfolio investors to trade foreign currency at a market-determined rate, currently about 375 naira a dollar. Before this, they bought greenbacks from the interbank market at a central bank-maintained rate of about 315 naira per dollar.
The International Monetary Fund forecast Nigeria’s economy will expand by 0.8 percent this year compared with a 1.6 percent contraction in 2016 as output of oil, the nation’s biggest export, increases, and the government boosts spending. The country will raise expenditure by 21 percent to a record 7.4 trillion naira ($23 billion) this year, according to the budget that vice and acting President Yemi Osinbajo signed on Monday.