Inflation returns! Will the vengeance continue in the coming months?   

17 May 2019 : It is coincidental how Nigeria’s inflation rate accelerated in April, only a month after the central bank unexpectedly reduced interest rates for the first time in more than three years.

With the impacts of the rate cut in March having a delayed effect and unlikely to be reflected any time soon, the 13.7% rise in inflation was based around rising food prices. Should inflation return with a vengeance in the coming months, businesses and consumers may feel the heat – ultimately impacting economic growth. All in all, it remains too early to come to any meaningful conclusion over whether inflation is set to rise, given how this has been the first increase in three months.

The next major risk event for the Nigerian economy will be the GDP report for Q1 which should offer critical insight into the health of the nation during the first quarter of 2019. A figure that exceeds the 2.1% year-over-year expectations should boost confidence over the health of the Nigerian economy.

Source: Lukman Otunuga, FXTM Research Analyst

Reporting for EasyKobo on Friday , 17 May 2019 in Lagos, Nigeria

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