Inflation in key African countries is expected to slow down into next year but remain high in Nigeria due to acute flooding and a difficult terrain for the Naira currency, a Reuters poll indicated.
According to Reuters, the Acute shortage of Dollars in much of the continent including Angola, Nigeria, and Zambia has often boosted home inflation due to a reliance on single commodity currency inflows such as crude oil and copper.
The polls conducted by 15 analysts in the past week showed that inflation would be less in countries with better diversified means of dollar revenue such as Kenya.
Inflation in Nigeria is expected to quicken to 29.1% this year from an average of 24.5% last year before it slows to 17.2% next year. It hit a 28-year high of 33.2% in annual terms last month.
Nigeria central bank governor Olayemi Cardoso raised the monetary policy rate by 200 basis points to 24.75% last month after a 400-basis point hike in February
Citi wrote in a note to its clients that even with a more coherent monetary policy now in place and potential naira stability, Nigeria’s inflation will only fall slowly this year.
The High inflation rate in Nigeria reflects ongoing elevated food price which accounts for around 50% of the Consumer Price Index basket and are only marginally impacted by monetary policy, Citi added.
High food inflation in the country is caused by sporadic flooding, high insecurity in food-producing regions, and a hike in the price of fertilizers.
In all the African countries reflected in the poll, Nigeria’s inflation is expected to remain the highest by the turn of next year despite efforts by the country’s financial management team.