Nigeria experienced its sixth consecutive month of rising inflation in June, with the year-on-year rate reaching 22.79%, up from 22.41% in May. This increase places additional pressure on the central bank to consider implementing further policy tightening measures during its upcoming meeting to determine interest rates.
The upcoming meeting scheduled for next week will be significant as it is the first since President Bola Tinubu suspended central bank governor Godwin Emefiele in June.
This decision followed Tinubu’s pledge during his May inauguration to conduct a comprehensive review of monetary policy and initiate a “thorough house cleaning” in the sector.
In June, food inflation in Nigeria, which constitutes a significant portion of the inflation basket, surged to 25.25% from 24.82% in May.
Since 2016, inflation has remained in double digits in Nigeria, the largest economy in Africa. This persistent high inflation has gradually eroded savings and incomes of the population.
Under Tinubu’s leadership, Nigeria has undertaken its most ambitious reform agenda in decades. This includes the elimination of a popular yet expensive petrol subsidy and the relaxation of restrictions on foreign exchange trading.
Analysts had cautioned that the depreciation of the Nigerian naira currency (NGN=D1) and the removal of the fuel subsidy were anticipated to contribute to a temporary increase in inflation.