Nigeria Inflation Rate Drops to More Than Five-Year Low of 7.8%

Nigeria’s inflation (NGCPIYOY) rate fell to the lowest level in more than five years in October as food prices eased, the statistics office said.

Inflation slowed to 7.8 percent from 8 percent in September, the Abuja-based National Bureau of Statistics said in an e-mailed report yesterday. Prices rose 0.8 percent in the month.

“Food prices continued to trend lower for the third consecutive month as a result of the harvest season that traditionally begins in July of the year,” the NBS said.

While inflation this year has stayed within the Central Bank of Nigeria’s target of under 10 percent, that hasn’t given policy makers enough comfort to reduce the benchmark interest rate from a record 12 percent. The Monetary Policy Committee will probably hold the rate when it meets next week, according to all six economists surveyed by Bloomberg.

Governor Lamido Sanusi said in an interview on Oct. 28 that there are no plans to reduce interest rates until “sustained price stability” is maintained. The bank is targeting inflation of 6 percent to 9 percent next year, he said four days later.

The bank will “focus on maintaining foreign exchange rate stability” by keeping interest rates unchanged, Lagos-based FSDH Merchant Bank Ltd. said in e-mailed comments yesterday.

The naira gained 0.1 percent to 159.40 against the dollar as of 11:38 a.m. in Lagos, paring its decline in the past six months to 1.4 percent.

Source: Bloomberg BusinessWeek