Already contending with the possible risk of price rises due to an increase in spending ahead of February’s presidential election, Nigeria may face higher inflationary pressures due to the recent drop in the price of crude oil, analysts have said.
According to Bloomberg, experts believe that the higher inflation risks could push Africa’s central banks to tighten monetary policy.
“The oil plunge could accelerate inflation in Africa’s largest crude producer as it hits foreign-exchange revenue and adds to pressure on the naira. Higher spending ahead of February’s presidential election already poses price risks,” the news agency stated.
It reported Samantha Singh, an analyst Absa Group Ltd, as saying that until the crude price-plunge, “for most African countries it seemed that policy would be tighter for longer, but if oil prices continue to fall, given that it is such a large part of most countries’ imports profile, inflation would follow and the bias could eventually shift.” Read more