KEY POINTS
- Nigeria’s inflation slowdown boosts chance of rate cut.
- Consumer prices dropped to 18 percent in September.
- Central bank eyes sustained disinflation amid stable naira.
Nigeria’s inflation rate fell below 20 percent in September, the first time in three years signaling sustained price relief and giving the Central Bank of Nigeria room to loosen policy further.
The National Bureau of Statistics said Wednesday that annual inflation slowed to 18 percent from 20.1 percent in August, undershooting economists’ median forecast of 19 percent. Month-on-month, prices rose 0.7 percent.
Inflation slowdown builds case for policy shift
The decline marks the sixth straight month of easing inflation, driven by higher crude output and lower food prices at the start of the harvest season. The combination has helped stabilize the naira and steady the cost of imports.
Monetary authorities will meet again on Nov. 25, and analysts say the softer numbers could lead to another rate cut. The monetary policy committee last month reduced the benchmark rate by 50 basis points to 27 percent, its first cut in five years.
Governor Olayemi Cardoso said in September that disinflation should continue, supported by the “lagged effects of previous rate hikes, continued stability in the foreign exchange market,” and lower gasoline prices.
Sustained disinflation may prompt rate cut
The central bank will further monitor new risks from a late-September oil strike that briefly disrupted output, and technical issues at the Dangote refinery that led to temporary fuel shortages. Both developments came after the latest data.
Food inflation slowed sharply to 16.9 percent from 21.9 percent in August, while core inflation, which excludes volatile items, eased to 19.5 percent from 20.3 percent.
The continued moderation in prices, alongside steady exchange rate conditions, reinforces expectations that the CBN may act again to ease borrowing costs before the year ends.
