(Bloomberg) -- Nigeria’s annual inflation rate fell to a six-month low in August, offering policymakers a window to halt an unprecedented tightening cycle when they meet next week.
Consumer prices rose 32.2% from 33.4% in July, the National Bureau of Statistics said in a statement published on its website on Monday. That matched the median estimate of nine economists in a Bloomberg survey.
The receding impact on prices of a currency devaluation and the temporary removal of fuel subsidies instituted a year ago contributed to the slowdown. The measures formed part of reforms introduced by President Bola Tinubu after he entered office in May 2023 to attract investors, float the currency and ease budget pressures.
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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% increase in gasoline prices in early September, which saw a bump in transport costs, was not captured.
What Bloomberg Economics Says...
“Nigeria’s inflation is falling, albeit gradually. Smaller food price gains helped counter the inflationary effect of higher energy and transport costs. Inflation’s gradual slowdown will likely see it falling below 30% in early 2025. Moderating inflation and a tough economy support holding interest rates next week.”
— Yvonne Mhango, Africa economist. Click here to read more.
The slowdown raises the prospect that policymakers will pause a tightening cycle that’s lifted the benchmark rate to 26.75% from 11.5% 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% in August from 39.5% a month earlier. Core price growth, which excludes agricultural produce and energy, quickened slightly to 27.6% from 27.5%.
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--With assistance from Artyom Danielyan.
(Updates with chart and comment from Bloomberg Economics)
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