Nigeria inflation rises further in June, putting pressure on central bank

By Elisha Bala-Gbogbo and Chijioke Ohuocha

ABUJA (Reuters) – Nigeria’s inflation rose for the sixth month in a row in June, to 22.79% year-on-year from 22.41% in May, putting pressure on the central bank to tighten policy further when it meets to set interest rates next week.

Next week’s meeting will be the first since new president Bola Tinubu suspended central bank governor Godwin Emefiele in June after promising a “thorough house cleaning” of monetary policy at his May inauguration.

One of Emefiele’s deputies, Folashodun Shonubi, is currently acting central bank governor.

Data from Nigeria’s National Bureau of Statistics showed food inflation was a key driver of the increase in the headline rate.

Food inflation accounts for the bulk of Nigeria’s inflation basket and rose to 25.25% in June from 24.82% in May.

Inflation has been in double-digits in Africa’s biggest economy since 2016, eroding savings and incomes.

At its last monetary policy meeting in May, the central bank under Emefiele hiked its main interest rate by 50 basis points to 18.50%.

Under Tinubu, Nigeria has embarked on its boldest reform agenda in decades, including the removal of a popular but costly petrol subsidy and the loosening of restrictions on foreign exchange trading, a gamble by Tinubu to try boost sluggish economic growth.

Analysts had warned that a weaker naira currency and the fuel subsidy removal were likely to push inflation higher in the short term.

(Reporting by Elisha Bala-Gbogbo and Chijioke Ohuocha; Editing by Alexander Winning and Christina Fincher)