Nigeria’s annual consumer price inflation eased to a five-year low of 8.4% in June from 9.0% in May, staying within the central bank’s single digit target since the start of the year, the country’s National Bureau of Statistics said.

The urban inflation rate slowed to 8.4% last month from 9.4% in May, while the rural inflation fell to 8.3% from 8.6%. The average inflation for the 12-month period to end-June 2013 was 10.4%, with urban inflation at 12% and rural inflation at 9.2%.

The food sub-index, which includes farm produce and processed food, was 9.6% higher y/y in June, up from the 9.3% rise recorded in May. From May to June, food prices rose 0.7%, accelerating from a 0.5% m/m growth in May, as the country is deep into the planting season and there is tight supply of farm produce, the statistics office said. The average rate of food inflation for the 12 months to end-June was 10.4%, compared to 10.5% in the 12-month period to end-May.

The annual core inflation, which excludes the prices of volatile agricultural products, slowed to 5.5% last month from 6.2% in May. The monthly core inflation was 0.3% in June, lower than May’s 0.5%. The average 12-month annual core inflation eased to 10.7% in June from 11.5% in May. Core inflation is expected to remain muted by the end of the year due to high base effect.

In May, Nigeria's central bank retained its monetary policy rate (MPR) at 12% for a 10th time in a row, aiming to sustain the macroeconomic gains of the tight monetary policy and to continue to rein-in inflationary expectations.

The next meeting of the Monetary Policy Committee (MPC) is scheduled for next week. Central bank governor Lamido Sanusi has said the bank should not rush to cut interest rates despite the slowdown in inflation, adding that a potential rate cut should depend on what happens in the fiscal space and whether the government would be able to control spending. Most analysts expect the central bank to hold rates unchanged next week.