Nigeria's annual inflation rate dips slightly in April, naira in focus

ABUJA: Nigeria's annual inflation eased marginally to 18.12%, the first dip in the rate in 20 months, the statistics office said on Monday, despite recent naira weakness.

It reached a more than four-year high of 18.17% last month and analysts say a weaker naira currency could yet stoke a further rise in prices. The central bank targets an inflation band of 6% to 9%.

Africa's biggest economy let its currency to weaken against the dollar on the official market from Friday, in a possible move by the central bank to unify its numerous exchange rates.

On Monday, the naira inched down against the dollar with only two quotes shown for the currency after two late trades. Volumes were not shown for those trades, however.

The National Bureau of Statistics (NBS) said on Monday core inflation -- the price index less farm produce -- rose 7 basis points in April to 12.74%.

"The highest increases were recorded in prices of pharmaceutical products, vehicle spare parts, ... hospital services, fuel and lubricants for personal transport equipment," the NBS said.

The economy emerged from its second recession since 2016 in the fourth quarter after the coronavirus pandemic caused oil prices to crash, slashing state revenue, creating large financing needs and weakening the naira.

Nigeria, Africa's most populous country, expects to release first quarter growth data next week. The central bank is set to determine interest rates later this month.

The bank has kept rates on hold to support the economy but dollar shortages have been contributing to inflation.

Food prices, the major component of inflation, has been rising in the past heaping pressure on households who are already faced with a shrinking labour market and stagnant growth at a time of mounting insecurity.

The NBS said its food index declined 23 basis points from the previous month to 22.72% in April.