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Nigeria’s headline inflation edged higher in December as the festive season caused imported food prices to soar. The consumer price index rose to 9.6 percent in December from 9.4 percent in November, according to a monthly inflation report released by the National Bureau of Statistics (NBS) on Sunday.

The higher inflation figures in December comes after the Central Bank of Nigeria loosened its tight monetary policy stance in November by slashing benchmark interest rates from 13 percent to 11 percent.

Food inflation increased for the second successive month, driven by rising imported inflation. The restrictions in the foreign exchange market imposed by the CBN have led to tight supply of dollars in the market pushing up the prices of imported food items. Food inflation last month reached 33-month high (11.1% year-on-year) due to the festive season and dollar shortage.

“All major food groups which contribute to the food sub- index increased at a faster pace during the month with the exception of the milk, cheese and eggs group,” the NBS said.

Cost of transportation also increased in December weighing on the inflation figure. The shortage of petrol supply in the last few months of 2015, worsened in December, leading to high transportation cost.  

Nigeria’s inflation figures have been rising steadily since November 2014 after declining oil prices forced the CBN to devalue the naira and impose stiff forex controls. The inflation rate crossed the CBN’s upper limit of 9 percent in June last year.

Chibuike Oguh is Financial Nigeria's Frontier Markets Analyst