Nigeria’s consumer inflation fell for the third straight month in September, mainly due to a drop in the underlying “core” price growth that is closely watched by the central bank.
Headline inflation eased to 11.3 percent year-on-year in September, down from 11.7 percent year-on-year in August and a 2012 peak of 12.9 percent in June, official statistics showed on Wednesday.
Food inflation, the largest contributor to the headline index, rose slightly to 10.2 percent year-on-year in September, from 9.9 percent in August, NBS numbers showed.
But core inflation, which excludes volatile items like food, dropped to 13.1 percent year-on-year in September from 14.7 percent the previous month.
“The moderation in the Core index was partially as a result of base effects, as the sharp rise in the index exhibited in September 2011 implies that the relative rise in September 2012 may be muted,” an NBS document said.
Nigeria’s central bank kept its base interest rate on hold at 12 percent last month for the sixth time in a row, citing the high rate of core inflation as one of the reasons for keeping monetary policy tight.
However, the central bank has for months prioritised supporting the volatile naira currency and building up foreign exchange reserves, running a relatively tighter monetary policy as a result.
“Assuming nothing else changes, inflation is likely to continue to decelerate in the months ahead as tight money supply has more of an impact,” said Razia Khan, Head of Africa Research at Standard Chartered.
“(But) despite the steady deceleration in Nigerian inflation, we still see interest rates on hold for the time being,” Khan added.