(Updates with analyst comment starting in third paragraph.)
Sept. 14 (Bloomberg) -- Inflation in Nigeria, Africa’s biggest oil producer, stayed near the limit of a central bank target and the economy expanded 7.72 percent in the second quarter, keeping pressure on the bank to raise interest rates.
The inflation rate fell for a second month to 9.3 percent, the lowest level in more than three years, from 9.4 percent a month earlier, Yemi Kale, head of the National Bureau of Statistics told reporters today in Abuja, the capital.
“Much of the improvement in headline consumer price inflation can still be explained by the positive influence of domestic food prices, and this should continue in the months ahead,” Razia Khan, the London-based head of African economic research at Standard Chartered Bank Ltd., said today in an e- mailed note to clients.
The central bank raised its benchmark interest rate on July 26 for the fourth consecutive time as it sought to stabilize the naira and slow inflation to below its 10 percent target. The bank is determined to make sure inflation remains under control, Governor Lamido Sanusi said Sept. 7. Policy makers give their next decision on interest rates on Sept. 20.
With fiscal policy contributing to “excessive liquidity conditions” and plans by the state-owned Asset Management Corp. of Nigeria to increase debt issuance, even a pause in inflation “is unlikely to be the end of Nigeria’s tightening cycle,” Kahn said.
Nigeria’s economy, the second-biggest in sub-Saharan Africa after South Africa, expanded 7.72 percent in the second quarter, compared with 7.69 percent a year earlier, Kale said. Growth was driven by the non-oil sector, which expanded 8.82 percent, he said.
Crude oil production rose to an average of 2.45 million barrels a day in the second quarter, compared with 2.35 million barrels a year earlier, boosted by less violence in oil- producing areas, Kale said.
--Editors: Gordon Bell, Antony Sguazzin
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