Nigeria: Inflation quickens to over two-year high in September
October 14, 2020
Consumer prices climbed 1.48% over the previous month in September, above the 1.34% rise logged in August. September’s reading marked the sharpest increase in over three years and was primarily driven by quicker price growth for food.
Inflation jumped from 13.2% in August to 13.7% in September, marking the highest reading since February 2018. As a result, it moved further above the Central Bank’s target range of 6.0%–9.0%. Meanwhile, annual average inflation edged up to 12.4% in September (August: 12.2%).
Moreover, core consumer prices, which exclude volatile agricultural produce, rose 0.94% over the previous month in September, decelerating from August’s 1.05% increase. Lastly, core inflation ticked up to 10.6% from 10.5% in the previous month.
Commenting on the drivers behind the acceleration in inflation seen since the start of the year, Dylan Smith and Andrew Matheny, economists at Goldman Sachs, noted:
“The primary source of inflationary pressure this year has been pass-through from the recent FX depreciation of the official and formal (NAFEX) Naira exchange rates, compounded by official FX restrictions and undersupply of foreign exchange. This has pushed transactions into the parallel market, where the exchange rate is significantly weaker. The removal of a long-standing official fuel subsidy in April has also contributed to inflation linked to import prices in recent months”.