Nigeria’s inflation rate declined to an annual 11.1 percent in February, remaining above the central bank’s target rate.
Consumer-price growth compared with a 12.1 percent gain in January, the National Bureau of Statistics said in a statement released in the capital, Abuja, today.
“A stable exchange rate and the fact that the dollar appreciated against other currencies are some of the reasons behind the drop,” Bismarck Rewane, chief executive officer of Lagos-based fund manager, Financial Derivatives Co. Ltd., said by phone today.
Central bank Governor Lamido Sanusi signaled on March 4 he may lift the benchmark interest rate for a second time this year, as the government increases spending before next month’s election and food and oil costs soar. Sanusi increased the rate by a quarter of a percentage point to 6.5 percent on Jan. 25 to help the central bank meet its target of bringing inflation below 10 percent.
Rising government spending and an advance in liquidity as the central bank recapitalizes commercial banks are “reasons for tightening” monetary policy, Sanusi said in an interview with Bloomberg Television on March 4. Further rate increases will depend on the March inflation data, he said.
While Nigeria is Africa’s biggest oil producer, it relies on fuel imports for more than 70 percent of its domestic needs because of a lack of refining capacity. The government subsidizes domestic fuel prices, boosting its spending as oil costs rise, increasing pressure on inflation. Crude oil reached $106.95 a barrel on March 7, a 29-month high.