Nigeria’s National Bureau of Statistics, on Tuesday, reported that the country had experienced a 0.1 percentage point rise in inflation to 15.7% in February due to fuel shortages, which increased transportation and other costs, as well as the unrest in Ukraine driving up wheat imports.
The impact of Russia’s invasion of Ukraine last month could threaten the recovery from COVID-19 on Africa’s financial markets, trade, transport logistics, food, and commodity prices.
It is predicted that the halt in grain exports caused by the war will hit African countries. According to the statistics office, wheat was Nigeria’s second-largest import in the fourth quarter after petrol.
Even though Nigeria is a crude oil exporter, it is mostly dependent on imported gasoline that it subsidies.
“In the long run, we may not be gaining (from high oil prices) because of the tendency of bringing in inflation into the country,” Simon Harry, head of the National Bureau of Statistics, said on Tuesday in Nigeria’s capital, Abuja.
“There are so many dimensions that the (Ukraine) crisis would be affecting the economy … so that even the projections made for growth for 2022 may remain a mirage.”
Nigeria’s inflation rate has been in double digits since 2016, due to food-related pressure and currency weakness, which prompted the government to restrict the use of foreign exchange for certain items.
In February, the major component of food price inflation, 17.11%, decreased by 0.02 percentage points. Core inflation, excluding farm product prices, rose to 14%.
The price of flour is expected to rise to N30,000 ($72) per bag in the coming quarter, up from N22,000.
Nigerian authorities say persistent inflation is structural – linked to deficits rather than solely to the money supply – and largely imported.
Next week, the central bank will set interest rates. The central bank may have to reconsider its dovish stance on interest rates if inflation remains in double-digits, despite fragile economic growth.