Nigeria’s inflation jumps to an 18 year high following appointment of new central bank governor predecessor forced to resign
Nigeria’s annual inflation rate accelerated to an 18-year high of 25.8% in August, official data showed on Friday, as Africa’s largest economy grapples with rising prices ahead of a central bank interest rate decision later this month.
The sombre news comes after it was announced that President Bola Tinubu has nominated the former head of Citibank in Nigeria, Olayemi Cardoso, to serve as the country’s new central bank governor, days before its next interest rate meeting, a presidential spokesperson said on Friday.
Cardoso was part of the team that had been working on an economic blueprint for the new government. He was a former commissioner for economic planning and budget in Lagos state when Tinubu was governor between 1999-2007.
Government sources told Reuters that Godwin Emefiele, who was suspended as central bank chief by Tinubu in June and later detained by state police and charged with procurement fraud, was forced to resign last month, effectively clearing the way for Cardoso to replace him.
The central bank did not respond to a request for comment on whether Emefiele and his deputy governors had resigned. Ngelale declined to comment when asked about Emefiele’s resignation.
“The President expects the above listed nominees to successfully implement critical reforms at the Central Bank of Nigeria, which will enhance the confidence of Nigerians and international partners,” Ngelale said in a statement.
Tinubu sent Cardoso’s nomination to the Senate for confirmation alongside four new deputy governors, spokesperson Ajuri Ngelale said.
The central bank raised rates by a smaller-than-expected 25 basis points in July, contrary to analysts’ expectations, under acting Governor Folashondun Shonubi, one of Emefiele’s deputies.
The bank is due to set rates again on Sept. 26 and some analysts expect a more hawkish stance.
Tinubu in May removed a popular but costly decades-old petrol subsidy and ended exchange controls, leading to a spike in prices from food to transport fares and angering unions who have threatened strikes.
A man counts Nigerian naira notes in a market place as people struggle with the economic hardship and cashflow problems ahead of Nigeria’s Presidential elections, in Yola, Nigeria, February 22, 2023. REUTERS/Esa Alexande
The August inflation figure rose for an eighth straight month from July’s 24.08%, according to the National Bureau of Statistics (NBS), compounding a cost of living crisis worsened by Tinubu’s reforms.
The last time Nigerians experienced this level of inflation was in August 2005, official data shows.
“Nigerian inflation rose faster than expected in August, a month that more typically sees seasonally subdued inflation pressures,” said Razia Khan, Standard Chartered managing director and chief economist, Africa and Middle East.
Economic analysts said naira depreciation, higher fuel and food prices, logistics costs and money supply growth, were some of the major drivers of Nigeria’s inflation.
Tinubu, whose disputed February presidential election victory was upheld by a tribunal last week, has said he will not go back on reforms. Labour unions say reforms have hurt the poor and should be reversed.
Nigeria’s new government wants to encourage investments rather than rely on borrowing to create jobs as it tries to revive an economy struggling with record debt, a weak currency, double-digit inflation and fragile power supplies.
Akowe with reports from Reuters/NAN