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Following the release of Nigeria's GDP data for the second quarter of 2016 which confirms Nigeria has officially slipped into a recession, the National Bureau of Statistics (NBS) also announced on Wednesday that the country’s Consumer Price Index (CPI) rose for a ninth consecutive month in July to 17.1 per cent.

The inflation rate for last month is the highest recorded by the NBS in 11 years. On a month-on-month basis, the headline index increased by 1.3 per cent from 16.5 per cent reported in June.

Food sub-index increased by 15.8 per cent in July, compared to 15.3 per cent in June; Core sub-index increased by 16.9 per cent last month from 16.2 per cent in the previous month; Urban inflation also rose to 18.9 per cent in July from 18.1 per cent in June; while Rural inflation jumped to 15.5 per cent in July compared to 15.1 per cent in the previous month.

Last month, the Central Bank of Nigeria (CBN) raised its benchmark interest rate by 200 basis points from 12 per cent to 14 per cent to curb rising inflation. Some analysts say they expect a further rate rise at the next Monetary Policy Committee meeting in September.

The rate of inflation has accelerated further following the adoption of the flexible foreign exchange regime by the CBN in June. The naira has since fallen by over 58 per cent since the currency peg of N199 to the dollar was removed, depreciating to N314.5 per dollar on Monday this week at the interbank market. On the parallel market, the naira depreciated to N405 per dollar.

The NBS said uncertainty surrounding the new exchange rate policy may have deterred investors. Nevertheless, on Monday, the Managing Director of the FMDQ OTC Securities Exchange, Bola Oladele Koko, said that foreign portfolio investors who bought local currency bonds made a single $270 million transaction. Total volume of trade in the Nigerian forex market reached to $327 million on the same day. This influx of foreign portfolio investment this week increased Nigeria’s foreign reserves by $594 million, according to the CBN.