Nigerian inflation dips to lowest for two years

By Camillus Eboh

ABUJA (Reuters) - Nigeria's consumer inflation eased to 10.3 percent year-on-year in June from 11.0 percent the previous month, its lowest level for more than two years, the National Bureau of Statistics said on Friday.

Growth in food prices, which form the bulk of the inflation index basket in Africa's most populous country, also eased, to 12.0 percent year-on-year from 12.3 percent in May.

The growth in consumer prices is the lowest monthly year-on-year increase since May 2008, when it rose to 9.7 percent, according to figures from the statistics office.

"Once again, despite ample domestic liquidity, Nigerian inflation surprises with a year-on-year fall," said Razia Khan, head of Africa research at Standard Chartered.

"For now, it supports an unchanged monetary policy stance, but the central bank will still need to watch future risks closely."

Nigeria's benchmark interest rate has been on hold at 6 percent for more than a year as the central bank prioritises stimulating growth in sub-Saharan Africa's second-largest economy despite the inflationary risks.

The monetary policy committee noted again at its last meeting just over 10 days ago that inflation remained a potential concern, but this is the second month in a row that headline inflation has eased.

The statistics bureau said the rise in the food index was caused mainly by slight increases in the prices of some staples like yam, potatoes and meat as well as fruit and beverages.