CPI fell to 12.8 percent year-on-year in July, down from 12.9 percent in June. | By Eki Toju

Nigeria’s consumer inflation eased marginally in July, statistics showed on Friday, surprising many analysts who had expected it to rise due to the effects of fuel subsidy removal in January and base effects.

The National Bureau of Statistics (NBS), in a report, said that consumer price index (CPI) fell to 12.8 percent year-on-year in July, down from 12.9 percent in June. The CPI increased 0.24 percent month-on-month.

“A look at the monthly changes over the previous three months reveals that although the CPI has generally risen, its increase has been at a slower rate, which suggests that prices may be easing across the economy,” the NBS said.

The Central Bank was anticipating consumer inflation rising to around 14 percent by the end of the first half of this year, due to the upward effects on prices from the partial removal of fuel subsidies.

Interest rates have been on hold at 12 percent since October last year but the bank tightened money supply at its meeting last month to help support the weakening naira.

“The implication (from July figure) is that this year’s inflation has peaked at much less elevated levels than anticipated a few months ago, and will probably decelerate to around 10 percent by year end,” Standard Bank economist, Samir Gadio, said.

“This development has the potential to trigger another rally in the bond market in the near future.”

The Central Bank has said repeatedly it is committed to supporting the naira with disciplined monetary policy. Lower than expected inflation figures alone are unlikely to be enough to encourage a rate cut in the near-term.

Core inflation, which excludes volatile food produce and is closely watched by the bank, was 15 percent year-on-year in July, down from 15.2 percent the previous month, but still far above the regulator’s preferred single-digit range.

“We do not believe that we will see a move to ease monetary policy, even following this inflation print. Inflation remains in double digits for now, leaving little room for complacency,” said Razia Khan, Head of Africa Research at Standard Chartered.

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