Analysts are afraid that the rate may cross the single-digit threshold when the new government begins to pay dividend of democracy and spending for the Christmas season begins.
The consumer inflation went up by 0.1 percentage point from August and is now staying above the central bank’s target ceiling, the National Bureau of Statistics (NBS) said on Wednesday.
Food inflation rose marginally to 10.2 per cent year-on-year in September versus 10.1 per cent in August.
Analysts believe that inflation has been rising this year as the effects of a weaker currency filters through the economy via imports. Due to its inadequate manufacturing capacity, since Nigeria imports the bulk of what it consumes.
“The largest increases were recorded in books and stationeries groups as a result of the start of the new school year,” the bureau said. “Pressures were recorded in the bread and cereals, meat, fish, and oils and fats groups.”
Nigeria’s inflation rate is at its highest level since February 2013. It rose above a central bank’s upper limit target of 9 per cent in June.
Africa’s biggest oil producer has been hit hard by the slump in global crude prices, which has sent its naira currency spiraling. The central bank has restricted access to dollars for certain imported items to conserve its hard currency reserves, frustrating businesses.
Vice president Yemi Osibanjo has said Africa’s most populous nation will keep the currency restrictions for now to preserve its foreign reserves but will eventually relax them.
Bismarck Rewane, chief executive officer of Financial Derivatives Company (FDC) Limited believes that the current inflationary trends seem to be more structural despite CBN’s statement in its July communiqué that the inflationary pressures were transient.
“With the cabinet set to take their portfolios in a few days, the Nigerian economy will be shifting from safe mode to active. We are therefore expecting that inflationary pressures that have been relatively benign will become more potent”, he explained.
The primary catalysts of price inflation in Nigeria are cost-push factors. Rewane thinks these are being intensified by the restriction of dollars for some critical inputs.