February 17, 2026/Cordros Report
The National Bureau of Statistics reported a moderation in headline inflation to 15.10% y/y in January (December: 15.15% y/y), contrary to general expectations of a sharp increase (Bloomberg median estimate: 19.50% y/y; Cordros estimate: 18.95% y/y), which had been linked to technical adjustments in the revised CPI series. The softer y/y reading was primarily driven by a sharp month-on-month contraction of 2.88% (December: 0.54% m/m). Food inflation declined by 195bps to 8.90% y/y (December: 10.84% y/y), while core inflation (all items less farm produce and energy) eased by 91bps to 17.72% y/y (December: 18.63% y/y).
On a month-on-month basis, consumer prices contracted by 2.88% in January (December: +0.54% m/m), marking a sharp reversal from the prior month’s increase. We assess that the scale of the contraction is largely driven by technical adjustments to the revised CPI methodology, rather than a broad based moderation in underlying price pressures or a meaningful improvement in domestic supply conditions.
Disaggregating the data, the food index declined by 6.02% m/m (December: –0.36% m/m), driving food inflation lower to 8.90% y/y (December: 10.84% y/y) and returning it to single digit territory. Within the food basket, the farm produce index declined by 5.10% m/m (December: -0.41% m/m), while imported food contracted by 6.81% m/m (December: +2.77% m/m). This pronounced sequential decline is notable given the typically tighter food supply conditions that follow the conclusion of the main harvest season in December. Although the exchange rate has remained relatively firm, the pace of appreciation has been gradual, suggesting that underlying cost dynamics have not shifted sufficiently to fully account for the magnitude of the January contraction.
The core index also dropped sharply by 1.69% m/m (December: +0.58% m/m), pushing the y/y inflation print down to 17.72% y/y (December: 18.63% y/y). Across the subcomponents, prices fell in transportation (–1.02% m/m vs December: +0.12% m/m), information and communication (–2.26% m/m vs December: –0.59% m/m), recreation, sport and culture (–7.17% m/m vs December: +2.14% m/m), and insurance and financial services (–0.70% m/m vs December: +0.21% m/m). These more than offset price increases in alcoholic beverages, tobacco & narcotics (+0.27% m/m vs December: +0.09% m/m), clothing & footwear (+0.73% m/m vs December: +0.13% m/m), utilities (+0.52% m/m vs December: +0.01% m/m), health (+0.16% m/m vs December: +0.01% m/m), and miscellaneous goods and services (+0.28% m/m vs December: +0.07% m/m).
Broad Price Momentum Expected to Remain Contained
On a month-on-month basis, we expect inflation to edge higher in February, primarily driven by firmer farm produce prices and moderate increases in energy costs.
Specifically, following the conclusion of the main harvest cycle, early year food supply conditions often enter a normalization phase before the dry season harvest (typically spans between April and May). While rainfall patterns have remained somewhat extended in select regions (including the Southern region and parts of the Middle Belt states), we believe supply dynamics may still tighten temporarily across certain fresh produce categories, thereby exerting mild upward pressure on food prices.
That said, the recent appreciation of the naira should provide a partial cushion by reducing imported input costs and moderating exchange rate pass-through to consumer prices. While global crude oil prices remain elevated, the stronger naira has helped temper the adjustment in domestic PMS prices, thereby limiting broader spillovers to transportation and logistics costs.
Overall, although we anticipate a modest month-on-month uptick, underlying price dynamics remain relatively contained. As a result, we expect the year-on-year inflation rate to maintain its gradual downward trajectory in the near term. Specifically, in the absence of further technical adjustments to the CPI methodology, we project headline inflation to rise by 1.38% m/m in February. Nevertheless, favourable base effects should drive a further moderation in the y/y rate to 14.35% (January: 15.10% y/y).
