Analysts expect inflation slowdown despite food price pressures

Nigeria's headline inflation is projected to keep falling in the coming months, according to analysts at Comercio Partners. This trend is expected despite ongoing pressure from food prices, as easing core inflation and a more stable exchange rate provide offsetting factors. The National Bureau of Statistics reported that headline inflation dropped to 15.43 percent year-on-year in July 2026, down from 15.91 percent in June, marking the second consecutive monthly decrease.

Analysts noted that the July figures indicate inflationary pressure is increasingly concentrated in volatile food categories, rather than a widespread price increase across the economy. Core inflation, which excludes volatile items, saw a significant drop to 14.97 percent in July from 15.92 percent in June. This moderation in core inflation suggests weakening price pressures, especially with reduced exchange rate volatility.

However, food inflation presents a persistent challenge, surging to 20.31 percent year-on-year in July from 17.52 percent in June. Comercio Partners linked this surge to agricultural supply shortages, high logistics costs, seasonal influences, and structural issues that monetary policy alone cannot fix. "Food inflation remains a structural weakness," the analysts stated, highlighting its significant impact on household budgets, particularly for low- and middle-income families.

Despite the rise in food inflation, the overall headline rate moderated due to reduced contributions from key expenditure groups. The combined impact of lower contributions from food, restaurants and accommodation, transport, and housing, utilities, and fuels accounted for approximately 75 percent of the 0.48 percentage-point decline in headline inflation. Month-on-month headline inflation also eased to 1.57 percent in July from 1.66 percent in June.

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Food inflation remains a structural weakness.