ABUJA—Nigeria’s annual inflation rate declined to 9.4 per cent in July, the lowest level in more than three years, as the naira strengthened against the dollar, curbing imported food costs.
Inflation slowed from 10.2 per cent in June, an official from the National Bureau of Statistics told reporters in Abuja, yesterday.
The naira surged to N150.125 against the dollar on July 1; its highest level in more than six months after the Central Bank of Nigeria, CBN, lifted a curb on foreign investors’ bond holdings. Since then the currency has dropped 0.8 per cent against the dollar, while government spending has increased, keeping pressure on the CBN to raise its benchmark interest rate following four increases this year to 8.75 per cent.
“Inflation could now remain in single-digits in coming months,” Samir Gadio, an emerging markets strategist at Standard Bank Group Ltd. in London, said. “This does not imply that the Central Bank of Nigeria will not hike rates at its September” meeting however.
The outlook for inflation this year is “uncertain” due to the state’s plan to more than double the monthly minimum wage to 18,000 naira ($116) and to deregulate fuel prices, the CBN Governor Lamido Sanusi said last month. Core inflation, which excludes food, will probably accelerate in the second half of the year, he said.
Nigeria’s economy probably expanded about 7.9 percent in the second quarter and is expected to grow 8 percent this year, according to the statistics office.