September 16, 2025/Cordros Report
Based on data from National Bureau of Statistics (NBS), Nigeria’s headline inflation moderated by 175bps to 20.12% y/y in August (July: 21.88% y/y), primarily driven by a slowdown in food prices (-87bps to 21.87% vs July: 22.74%) and core (-100bps to 20.33% y/y vs July: 21.33% y/y) inflation. On a monthly basis, headline inflation fell by 125bps to 0.74% m/m (July: 1.99% m/m), marking the lowest monthly print since February 2019.
On a month-on-month basis, food inflation moderated sharply by 147bps to 1.65% in August (July: 3.12% m/m), representing the lowest monthly reading since December 2022. This was primarily driven by improved farm output from the green harvests in August, which helped ease price pressures. Notably, the farm produce sub-index slipped into deflation, at -0.24% m/m, compared to a 3.95% m/m increase in July. In addition, the relative stability of the naira has supported price moderation on imported food items, with inflation in this sub-basket easing to 1.28% m/m (July: 1.55% m/m).
Conversely, core inflation (+46bps to 1.43% m/m) ticked higher after a sharp drop in July (-149bps to 0.97% m/m). Price pressures were notable across the health (+241bps to +4.21% m/m), transport (+223bps to 2.60% m/m), miscellaneous (+100bps to +3.15% m/m) and Clothing and footwear (+130bps to 2.10% m/m) sub-indices. Nonetheless, prices fell in the Utilities (-276bps to 3.90% m/m), alcoholic beverages & tobacco (-139bps to -0.74% m/m), information and communication (-357bps to -1.58% m/m), education services (-310bps to -2.73% m/m), recreation, sports and culture (-232bps to -1.51% m/m) and insurance and financial services (-88bps to 0.38% m/m) sub-baskets.
Inflation May Fall More Sharply in the Coming Months
The third and fourth quarters of last year were characterized by price shocks, mainly stemming from the full removal of the PMS subsidy and poor harvest outcomes aggravated by widespread flooding. Given our expectations of stable energy prices, supported by declining global oil prices, and enhanced agricultural output resulting from improved weather patterns, favourable base year effects are likely to accelerate the deceleration in headline inflation over the coming months. Furthermore, strong FX reserves and robust inflows from autonomous sources are expected to keep the naira stable throughout the rest of 2025, thereby aiding the disinflation of imported items and anchoring general inflation expectations. Overall, we expect inflation to continue its downward trajectory, with headline inflation potentially declining substantially below the 20.0% threshold by September as core and food inflation ease further.
