Nigeria’s headline inflation hits 29.9% in January

Nigeria's headline inflation soared to 29.9 per cent in January, up from 28.9 per cent in December, reaching a nearly 30-year high driven primarily by surging food prices. Halimah Adediran, a Senior Research Analyst at Financial Derivatives, joined CNBC Africa to analyze the latest data. Adediran highlighted the persistent pressure on prices in Nigeria, citing factors such as exchange rate depreciation, increased money supply growth, and rising logistic costs due to the removal of subsidies. In addition, issues like food insecurity, supply chain disruptions, and inadequate infrastructure are further straining the economy. As a result, she expects inflation to continue climbing in the coming months. Looking ahead to the next monetary policy committee meeting, Adediran anticipates a hawkish stance from the Central Bank of Nigeria (CBN) to address inflation. She suggests a potential increase of 200 basis points in interest rates, with further adjustments likely in subsequent meetings. Adediran stresses the need for a coordinated approach involving both monetary and fiscal policies to achieve price stability. While steps like raising NTB rates and conducting primary market sales aim to reduce liquidity and stabilize prices, more targeted policies are necessary to effectively combat inflation. Adediran also cautions against rapid policy changes, emphasizing the importance of addressing one issue at a time for optimal results. In the broader context, the impact of inflation in Nigeria over the past three decades underscores the urgency of implementing comprehensive measures to mitigate its effects. Amidst rising inflation in neighboring Ghana following recent rate cuts, attention is increasingly focused on the outcomes of upcoming monetary policy decisions. The impending MPC meeting is poised to deliver crucial insights into the evolving economic landscape and strategies to counter inflationary pressures.