Analysts have indicated that the latest inflation figures from the Nigerian economy are good news for the Central Bank of Nigeria (CBN) and the economy as a whole.
Inflation in Africa’s largest economy dropped to its lowest in a year at 11.1% last month as food prices and services reduced in July compared to June.
FXTM Senior Research Analyst Lukman Otunuga said, “Further signs of inflation cooling during the third and fourth quarters of 2019 should present the CBN an opportunity to re-join the global easing bandwagon – ultimately supporting domestic economic growth.
“While the exact timings of the rate cut remain uncertain, it now remains a matter or when rather than if. Lower rates in Nigeria have the potential to stimulate consumption which accounts for roughly 80% of GDP.”
An analyst at Afrinvest said the moderation can be attributed mainly to a high base effect and slower M-o-M inflation of 1.0% compared with 1.1% in the previous month.
Across the major sub-indices, there was a broad-based slowdown. Food inflation slowed to 13.4% Y-o-Y from 13.6% in June 2019, reflecting a high base effect and slow increases in consumer prices M-o-M at 1.3% from 1.4% in the preceding month.
“We expect the downtrend in inflation to be sustained as we move further into the harvest season in the coming months.
“However, we believe the impact would be moderate given persistent security challenges in food producing regions,” the analyst opined.