Nigeria’s headline inflation rises for 7th month in a row

Nigeria's headline inflation has been on the rise for the seventh consecutive month in March, with a 6 basis point increase to 12.26%, while food inflation also surged to 14.98%. The Managing Director of Kairos Capital, Sam Chidoka, shared his insights on the current economic situation in Nigeria during an interview on CNBC Africa. Chidoka mentioned the impact of recent events such as the closure of borders and the coronavirus pandemic on the country's inflation figures. He highlighted the challenges faced by Nigeria due to its import dependence and lack of easy substitutes for imported goods. Chidoka expressed concerns about the potential effects of stimulus packages on inflation, noting that while they may help mitigate future inflation, the current situation remains challenging. He emphasized the need for effective distribution of stimulus funds to address the growing food inflation in the country. In addition to rising inflation, Nigeria is also grappling with a significant revenue shock caused by plummeting oil prices. Chidoka pointed out the unprecedented drop in oil prices, with the price of Brent crude hovering around $22 and the WTI turning negative. This sharp decline in oil prices poses a major challenge for Nigeria, a country heavily reliant on oil revenue to fund its budget. Chidoka warned that Nigeria may be forced to consider production cuts in response to the ongoing oil price crisis. He highlighted the storage concerns and discounted pricing faced by Nigerian oil producers amid reduced global demand for oil due to the economic slowdown caused by the COVID-19 pandemic. Overall, Nigeria is facing a complex economic scenario characterized by rising inflation, dwindling oil revenues, and the need to make difficult decisions regarding production cuts to navigate through these challenging times.