May 15, 2026/Cordros Report
According to the National Bureau of Statistics (NBS), the headline inflation rose for the second month in a row, increasing by 31bps to 15.69% year-on-year in April (March: 15.40% y/y). We attribute the increase primarily to the acceleration in food inflation to 16.06% y/y (March: 14.31% y/y), while core inflation slowed to 15.86% y/y (March: 16.21% y/y). However, on a month-on-month basis, inflation eased markedly to 2.13% after the 4.18% m/m spike in March, primarily reflecting softer energy price increases in April.
On a month-on-month basis, food inflation (3.63% m/m) increased at a slower pace in April, compared to 4.12% m/m in March. Despite the moderation, food prices remained elevated, largely reflecting tight supply conditions following the onset of the planting season. In addition, the continued passthrough of higher energy prices to logistics and transportation costs has sustained upward pressure on food prices. Within the food basket, prices of farm produce increased by 5.99% m/m (March: 4.60% m/m). Similarly, imported food rose by 4.38% m/m (March: 1.12% m/m). On a year-on-year basis, food inflation edged higher by 176bps to 16.06% (March: 14.31% y/y).
Elsewhere, the core index increased by 1.03% m/m (March: 4.03% m/m), with the y/y rate settling lower at 15.86% (March: 16.21% y/y). This was primarily driven by slower price increases across personal care (+0.87% m/m vs March: +5.21% m/m), restaurants and accommodation services (+2.62% m/m vs March: +6.92% m/m) and transport (+0.74% m/m vs March: +3.98%) sub-components. On the contrary, price pressures intensified across education services (+4.92% m/m vs March: +0.22%), information and communication (+4.07% m/m vs March: +1.15% m/m) and recreation (+2.69% m/m vs March: +1.01% m/m) sub-components.
Cost Pressures Expected to Stay Elevated
In the near term, inflation risks remain tilted to the upside, primarily due to persistently elevated oil prices, tight food supplies amid the ongoing planting season and continual insecurity in food producing areas.
Specifically, unsuccessful attempts to end the war in the Middle East and continued supply disruptions have kept oil prices above the USD100.00/barrel threshold for a prolonged period. So far in May, Brent crude prices have averaged USD105.89/barrel compared with USD101.43/barrel in April. Domestically, this has sustained upward pressure on energy costs, with Dangote Refinery’s gantry prices for PMS and diesel remaining elevated at NGN1,275.00/litre and NGN1,680.00/litre, respectively. The persistence of high energy prices has sustained elevated transportation and logistics costs, reinforcing passthrough pressures on food prices and other consumer goods.
In addition, farm produce supplies remain broadly tight despite the ongoing off-season harvest in the Northern region, which is expected to peak in May. The onset of the planting season has further constrained market supplies, as farming activities are currently focused on cultivation, leaving limited fresh harvest volumes available to bolster food supply. This is compounded by persistent insecurity in key food producing areas and higher fertiliser prices driven by increased energy costs, both of which continue to disrupt farming activities and raise production costs. Consequently, food supply conditions are likely to remain tight in the near term, sustaining upward pressure on food prices.
On a positive note, the naira has remained relatively stable, averaging NGN1,365.72/USD month-to-date compared with NGN1,361.22/USD in April. We believe this relative stability should help limit imported inflation pressures, particularly for items with high foreign exchange sensitivity. However, the disinflationary impact of a stable exchange rate is likely to be partly offset by still elevated energy costs and persistent food supply constraints. As a result, we expect headline inflation to remain sticky in the near term, with risks skewed to the upside unless oil prices moderate meaningfully and food supply conditions improve.
Overall, we forecast headline inflation to settle at 2.00% m/m in May, with the y/y rate rising to 16.22% (April: 15.69% y/y).
