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(Updates with comments by central bank governor from third paragraph.)
June 17 (Bloomberg) -- Nigerian Central Bank Governor Lamido Sanusi said monetary tightening alone won’t address accelerating inflation in the West African nation.
The rising cost of imported food and unsubsidized fuel products indicate the risks to inflation are still on the upside, Sanusi said by phone yesterday from the capital, Abuja.
“The reason we tightened policy at the last monetary policy committee meeting was partly because we believed the underlying fundamentals continue to point to inflation risks,” Sanusi said. “We think it will help up to a point.”
Nigeria’s inflation rate rose to 12.4 percent in May from 11.3 percent the month earlier, the National Bureau of Statistics said yesterday. With inflation above the 10 percent target, the central bank raised its key rate for the third time this year in May by half a percentage point to 8 percent. Policy makers also doubled the reserve requirement for banks.
Rising prices “would always be a problem through the import channel, especially with pressure on the naira even against a weakening dollar,” Sanusi said.
The central bank governor has previously warned that rising government expenditure may push up inflation in the West African nation.
President Goodluck Jonathan signed a revised 2011 budget on May 27 after lawmakers agreed to reduce spending plans to 4.48 trillion naira ($26.8 billion) from their previous proposal of 4.972 trillion naira.
--Editors: Philip Sanders, Ben Holland
To contact the reporter on this story: Emele Onu in Johannesburg at firstname.lastname@example.org.
To contact the editor responsible for this story: Alastair Reed at email@example.com.