Nigeria's inflation rises to more than 27-year high

Nigeria's inflation rate rose to its highest in more than 27 years in December as food prices surged, exacerbating a cost-of-living crisis and piling more pressure on the central bank to raise interest rates.

Consumer inflation rose for the 12th straight month in last month to 28.92 per cent year on year from November's 28.20 per cent, the National Bureau of Statistics said on Monday.

Inflation in Africa's biggest economy and most populous nation has not climbed this high since mid-1996.

The food inflation rate, which accounts for the bulk of Nigeria's inflation basket, rose to 33.93 per cent in December from 32.84 per cent a month earlier.

The statistics office said prices rose for a broad range of food items including bread which now sells for as high as N180, oil (N8,000 per five litre), fish (N2,500 per kilo), meat (N4,000 per kilo) and eggs (N3,200 per crate).

Analysts say higher fuel prices and a weaker naira currency have also stoked price pressures.

David Omojomolo, Africa economist at Capital Economics, said "inflationary pressures are only likely to build from here," citing second-round effects from the removal of a fuel subsidy last year and naira weakness.

He predicted that inflation would breach 30% by the end of the first quarter and said it was unlikely to peak until the middle of 2024.

President Bola Tinubu last May embarked on Nigeria's boldest reforms in decades by scrapping a costly but popular fuel subsidy and devaluing the currency to try to revive economic growth. But growth is yet to pick up while inflation has worsened.

Central Bank of Nigeria (CBN) Governor Olayemi Cardoso is yet to hold a rate-setting meeting since taking office in September.

"At the next meeting, we think that the CBN will need to raise rates by 400 basis points, to 22.75%, to show that it is taking the inflation fight more seriously," Capital Economics' Omojomolo said in a research note.