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Nigeria inflation at 17 month high on border closure as food prices bite

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Higher food prices in Nigeria have pushed up the annual inflation rates last month, as a result of the border closure with its neighbours in a crackdown on smuggling.

To stop the smuggling of rice and other goods, Nigeria had closed parts of its borders in August. The head of the customs said last month that all trade in goods via land borders have been halted indefinitely.

In October, the inflation was 11.61 %, up from 11.21% in September, according to the National Bureau of Statistics on Monday, the highest since May 2018 with consumer inflation dropping to its lowest in almost 4 years in august.

In a separate food price reports, the index showed inflation at 14.09% in October, compared with 13.51% a month earlier.

“This rise in the food index was caused by increases in prices of meat, oils and fats, bread and cereals, potatoes, ham and other tubers, fish and vegetables,” the statistics office said in its report.

“The rise in food inflation does suggest that border closures may have played a part in temporarily pressuring prices higher,” said Razia Khan, chief economist for Africa and the Middle East at Standard Chartered.

At a market in Abuja, shoppers say foodstuff have risen in the last few weeks, in particular, Rice which is very popular with millions of Nigerian families.

“Food items are very expensive in the market. When you go to a store they will tell you that is because the border is closed,” said housewife Naomi Nguher, who said she was given this reason for high rice prices at four different shops.

A wholesale rice trader, Sherifat Ajala in the commercial city of Lagos said Nigeria’s bad roads have contributed to delaying the transportation of the grain to meet the high demand.

“Trucks will spend almost two or three weeks on the road before they bring the rice,” he said.

Last week, along with neighbouring Benin and Niger, Nigeria had agreed to a joint patrol force that would tackle smuggling between the nations after their foreign ministers had met.

The central bank which held its main interest rate at 13.5% at its last meeting in September, is due to set its benchmark interest rate next Tuesday. The bank had targeted single-digit inflation.

A senior emerging markets economist at London-based Capital Economics, John Ashbourne said “Given the increase in inflation, we now expect that policymakers will leave their key rate on hold,”

 

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