Nigeria oil. Picture: REUTERS/AKINTUNDE AKINLEYE
Nigeria oil. Picturre: REUTERS/AKINTUNDE AKINLEYE

LAGOS — Nigeria’s inflation rate accelerated to a three-year high in December as food prices rose in Africa’s biggest economy and oil producer.

The consumer price index increased an annualised 9.6%, compared with 9.4% in November, the Abuja-based National Bureau of Statistics said in a report published on Sunday. Food price inflation climbed to 10.6% from 10.3%.

Inflation is now at its highest since December 2012 and has been above the central bank’s target of 6%-9% every month since May 2015.

Nigeria’s economy, which relies on oil for two-thirds of government revenue, has been battered by crude prices falling 42% in the last year to less than $30 a barrel. Efforts by the central bank to stem the fall of the naira by stopping banks from trading dollars are blamed by some analysts for accelerating inflation by preventing businesses from importing all the items they need to operate.

"Imported food along with other exchange-rate-sensitive price categories recorded higher sequential rates of inflation during December, likely as a result of tighter foreign exchange supply," Chernay Johnson, an analyst at Credit Suisse in Johannesburg, said in an e-mailed note to clients on Monday.

Inflation will be driven higher in the coming months by increased energy prices and government spending as President Muhammadu Buhari implements a record budget meant to stimulate the economy, she said.

"The upside risk to our end-2016 CPI inflation forecast of 10.2% is growing," Mr Johnson said. All 12 analysts surveyed by Bloomberg think the central bank will keep its main interest rate at 11% at its next meeting on from January 25-26.

Bloomberg