March 13, 2026/Coronation Report

Summary  

Ahead of the February inflation release, we expect headline inflation to moderate to 14.12% y/y down from 15.10% y/y in January 2026, extending the ongoing disinflationary trend observed over the past few months. The anticipated slowdown should be largely food-driven, as improving exchange rate dynamics continue to ease pressures on imported food items.

Key Drivers

Our projection is supported by favorable base effects, easing food price pressures, and slight appreciation of the Naira. On the food side, the ongoing government interventions in the agricultural sector to improve food supply conditions are beginning to ease pressures within the food component of the consumer basket and the appreciation of the Naira to ₦1,363.40/US$ from ₦1,386.55/US$ in January, is expected to reduce the cost of imported food items.

On the flip side, the recent energy market developments could keep core inflation sticky in the near term, as average Bonny Light crude oil prices rose to US$72.33 per barrel in February 2026, from US$68.04 per barrel in January.

The increase occurred after a U.S. military strike that captured Venezuelan President Nicolas Maduro in January. This development contributed to rising crude benchmarks, with the spill-over effect on the price of Premium Motor Spirit (PMS) to ₦799 per litre from N699 per litre as seen in late January 2026, with pass-through effects for the cost of transportation, and input costs for businesses.

On the global front, food prices edged higher, according to the FAO, Food Price Index (FFPI) averaged 125.3 points in February 2026, representing a 0.9% increase from the revised January level of 124.2 points, reflecting that higher prices for cereals, meat, and vegetable oils, offset declines in dairy and sugar prices, marking the first monthly increase after five consecutive months of declines

Outlook for March

The ongoing US/Israel-Iran war, by raising global energy prices, can reverse the deflationary trends that we have observed in previous months. Also, the $200 million financing approved by the African Development Bank Group to scale up priority agricultural investments is expected to be disbursed in March, but its impact is likely to materialise in the medium to long term, with limited immediate effects on food supply and prices.

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