Nigeria’s annual inflation rate decreased to a six-month low in August, offering the Central Bank of Nigeria (CBN) a potential opportunity to pause its aggressive interest rate hikes.
The National Bureau of Statistics reported that consumer prices rose by 32.2% in August, down from 33.4% in July.
The slowdown in inflation was primarily attributed to the diminishing impact of the recent devaluation of the naira and the removal of fuel subsidies.
These measures were implemented by President Bola Tinubu as part of his economic reforms aimed at attracting foreign investment and reducing government spending.
The easing inflation rate may provide the CBN with a window to halt its series of interest rate increases, which have been aimed at combating rising prices.
Higher corn yields and a six-month window to import the crop and wheat duty-free also contributed to the softening in price increases.
Data collection was concluded before mid-August, so the effect of a 45 percent increase in gasoline prices in early September, which saw a bump in transport costs, was not captured.
The slowdown raises the prospect that policymakers will pause a tightening cycle that’s lifted the benchmark rate to 26.75 percent from 11.5 percent in just over two years. It will also give the monetary policy committee, which will announce its decision on Sept. 24, time to assess the impact of recent currency volatility, devastating floods in northeastern Nigeria and the increase in gasoline prices on inflation.
Food inflation slowed to 37.5 percent in August from 39.5 percent a month earlier. Core price growth, which excludes agricultural produce and energy, quickened to 27.6 percent from 27.5 percent.
