Nigeria’s central bank has raised its benchmark interest rate to an all-time high of 15.5 percent.

The bank surprised analysts by adding 1.5 percentage points at one time, its third hike in as many policy meetings.

The bank may continue to raise rates, governor Godwin Emefiele told reporters after the newest meeting, adding that it is “imperative” to bring the costs of food and fuel, which have rocketed up during the Ukraine war and as a result of Western sanctions.

“It is difficult for us to not go in the aggressive way we have today,” he said. “This is the best option at this time.”

Consumer prices in Nigeria rose at an annual pace of 20.5 percent in August. Excluding food and fuel, the core price index jumped 17.2 percent, signaling that inflation has embedded itself throughout the country’s economy.

Nigeria is among a growing roster of countries suffering economically because of the dollar’s startling strength, as we have reported in “Strong Dollar Batters Emerging Nations’ Currencies” (5 Jul 2022), “Strong Dollar Weakens Other Economies, Forces Higher Rates” (2 Aug 2022) and in other articles.

However, Nigeria’s troubles are compounded by the price of oil, which accounts for 80 percent of the African nation’s foreign revenue.

Aside from a blip up above $120 a barrel, oil’s price has remained in double digits this year—good for emerging markets that produce oil but not enough to lift many out of fiscal trouble.

Benchmark Brent crude for November delivery traded at $88.86 at 5 p.m. U.S. EDT on 3 October.

Also, the country lost an estimated average of 437,000 barrels of oil a day from January through July to sabotage and theft, costing the treasury at least $10 billion, according to Nigeria’s Premium Times newspaper.

Stolen fuel and makeshift pipelines have been traced even to churches and mosques, the paper reported. 

Economic insecurity is expected to be a central issue in Nigeria’s February presidential election.

TREND FORECAST: Nigeria, like other emerging nations, are mired in Dragflation, our Top 2022 Trend in which economic activity falls while prices rise, in part because of higher interest rates. As this upside-down economic condition continues to spread among emerging nations, more will be pushed to default on their sovereign debts.