Nigeria’s May inflation seen defying CBN rate hike

The inflation rate for last month is expected to be higher than 33.69 percent despite the further increase in the monetary policy rate by the Central Bank of Nigeria to tame prices, according to Lagos-based Financial Derivatives Company (FDC).

The inflation data for May is due for release on Saturday.

“After 16 consecutive months of acceleration, Nigeria’s inflation rate is expected to uptick further in May 2024 defying the CBN’s tight monetary policy stance,” analysts at FDC said.

The CBN raised its key interest rate last month by 150 basis points (bps) to 26.25 percent, bringing the cumulative increase seen this year to 750bps.

“However, to contain the unintended consequences of an aggressive interest rate hike, the federal government is expected to roll out a fiscal stimulus package,” the analysts said.

A fiscal stabilisation program is a veritable tool for moderating inflationary pressure, easing the cost-of-living crisis and stimulating economic activity, according to FDC.

“These initiatives offer a flicker of hope, especially to Nigerian consumers and small businesses,” it said.