Nigeria’s annual consumer price inflation eased for the tenth month in a row to a new five-year low of 7.8% in October 2013 from 8.0% in September, the country’s National Bureau of Statistics said. The reading reflected a slower growth in food prices as a result of the harvest season that traditionally begins in July. Consumer prices rose 0.75% m/m last month, the same level as in September.

The urban annual inflation rate slightly slowed to 7.9% in October from 8.0% in the previous month and the rural inflation decelerated to 7.8% from 8.0%. The urban monthly inflation stayed at 0.8% for the second month running in October and the rural monthly inflation slightly eased to 0.73% from 0.74%. The average inflation for the 12-month period to end-October 2013 was 9.2%, with urban inflation at 9.8% and rural inflation at 8.7%.

The annual food inflation (measured by the food sub-index, which includes farm produce and processed food) moved lower for a third month in a row to 9.2% in October from 9.4% in September. From September to October, food prices rose 0.8%, slightly lower compared to 0.9% m/m growth in September.

The annual core inflation, which excludes the prices of volatile agricultural products, increased for the fourth consecutive month in October to 7.6% from 7.4% in September. The monthly core inflation was 0.6% last month, unchanged from September.

At its latest meeting held on Sep 25, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) retained its monetary policy rate (MPR) at 12% for the 12th time in a row and said that its tight monetary policy has helped to reduce inflation and maintain the exchange rate stability. CBN governor Sanusi Lamido Sanusi has said that the central bank would most likely stick to its tight monetary stance, and might even tighten it further, despite the fact that it expects headline inflation to remain below its single-digit target over the next six months. But the central bank fears that a looser monetary policy could pose risks to inflation, given the government’s loose fiscal stance and rising deficit, while the exchange rate stability could be endangered by a combination of potential revenue shocks and external developments.