Nigeria's annual inflation rate rose for the ninth consecutive months to 12.4 percent in May from 12.34 percent in April, the highest in 25 months, with analysts projecting that the upward trend will persist, driven by commencement of the new electricity tariff and Value Added Tax (VAT) as well as the new planting season.
Attributing the higher inflation rate in May to continued depreciation of the naira, analysts at Cowry Assets said: "The higher inflation rate was partly due to a rise in imported food index by 16.26 percent (higher than 16.24 percent in April) - against the backdrop of further depreciation of the naira against the dollar."
Projecting continued rise in the inflation rate in the coming months, they said: "We expect the general price level in the coming months to further increase amid current planting season and in view of the planned increase in electricity tariff kicks off later in the year."
On their parts, analysts at United Capital Plc attributed higher inflation rate to the impact of the restriction of interstate movements, border closures on supply chain as well as the impact of foreign exchange scarcity drove up the price of imported foods.
Noting that the continued rise in Nigeria's inflation rate, which is contrary to the trend in other African economies, Professor Uche Uwaleke, stressed that the inflationary trend poses challenge to the monetary policy decisions in the coming months.