By Adedapo Adesanya
The continued rise in Nigeria’s inflation rate, which hit 34.19 per cent in June 2024, has once again reduced the chances of rate cuts which have been hiked three times this year.
Data on Monday showed that the average price of goods and services rose for the 18th consecutive month on increases in food costs, housing, water, electricity, gas and other fuels, and transport.
Business Post analysis indicated that the month-on-month indices that slowed in previous months went up last month, with headline inflation rising by 2.31 per cent from 2.14 per cent, food inflation growing by 2.55 per cent from 2.28 per cent and core inflation soaring to 2.06 per cent from 2.01 per cent.
This development means the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) may be forced to further tighten the Monetary Policy Rate (MPR) again at its next meeting, having raised rates by 750 basis points this year alone.
The MPC is set to meet next Monday and Tuesday (July 22 and 23) to debate the next step. It was increased from 24.75 per cent to 26.25 per cent at the last meeting in May.
Already, the current level is worrying top businessmen like Mr Aliko Dangote, who have expressively called out the high rate, which is affecting businesses in the country.
Speaking at the National Manufacturing Policy Summit organised by the Manufacturers Association of Nigeria at the Banquet Hall of the State House, Abuja earlier this month, he lamented the high cost of borrowing at the banks.
“Nobody can create jobs with an interest rate of 30 per cent. No growth will happen. No power, no prosperity. No affordable financing, no growth, no development,” he said.
He has also in several capacities lamented the tough Nigerian operating environment.
On his part, the Governor of the CBN, Mr Yemi Cardoso, has maintained that the apex bank would do all it can to stabilise the economy on its end.
He also noted that the possibility of easing rate hikes was slim, adding that the MPC was set to use instruments available to it to tackle inflation.
“The MPC has been very clear in stating that they see inflation as a major impediment for the future of Nigeria, and they will do everything possible to ensure that they keep inflation in check and bring it down as reasonably as they can and I don’t see that changing,” he said in an interview with Bloomberg recently.
