March 14, 2018 / 8:26 AM / a year ago

UPDATE 2-Nigeria inflation at 11-month low on slowing food price gains

* Falling inflation could spur rate cut

* Central bank rate-setting group could meet next week

* Group had been on hold over political spat (Adds context)

By Chijioke Ohuocha and Paul Carsten

ABUJA, March 14 (Reuters) - Annual inflation in Nigeria fell to its lowest level in almost a year in February and slowed for a 13th month in a row led by decelerating food prices, the statistics office said on Wednesday.

Core inflation was 14.33 percent in February, its lowest since last April, down from 15.13 percent in January. The food price index showed inflation of 17.59 percent in February versus 18.92 percent in January.

Yemi Kale, head of Nigeria’s National Bureau of Statistics (NBS), said in January he expected inflation to fall faster this year, but that spending ahead of 2019 presidential elections could stoke prices.

Food price inflation has remained in high double digits over the last year. Kale has said the country is in a harvest period and output is increasing, which would help lower food prices, but household consumption remains fragile after the 2016 recession.

The central bank committee has not been able to meet or change rates since the beginning of the year because the upper house of parliament has held up some of President Muhammadu Buhari’s nominees so there was no quorum.

This political spat may be coming to an end, with the possibility of a rate-setting meeting as early as next Tuesday.

The bank has kept its main interest rate at 14 percent for over a year as it battles inflation and seeks to attract foreign investors to support the naira currency.

But economists see the central bank this year adopting a more dovish stance as inflation falls, and expect an interest rate cut in the coming months.

Nigeria is continuing its slow climb out of recession since the second quarter of 2017, but the International Monetary Fund warned in a report last month that the average person is getting poorer, as gross domestic product per capita is still falling - meaning the economy’s gains are not keeping up with the rising population. (Reporting by Chijioke Ohuocha and Paul Carsten in Abuja Editing by Catherine Evans and Dasha Afanasieva)

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