July 16, 2026/InvestmentOne Report
National Bureau of Statistics (NBS) reported that headline inflation marginally declined to 15.91% YoY in June 2026, 2bps lower than the 15.93% YoY recorded in May, driven by a combination of normalising base effects, and decline in energy prices when compared to the previous periods. Similarly, on a monthly basis, the continued deceleration in the pace of monthly prices was still prevalent, with month-on-month headline inflation declining to 1.66% in June from 1.75% in May.
In the near term, we expect headline inflation to remain sticky, despite the marginal moderation recorded in June. July inflation could increase following the renewed escalation of the US Iran conflict after the fragile truce reached last month broke down. This is expected to place further strain on global energy supplies, potentially raising PMS and AGO costs and increasing energy driven inflationary pressures.
Similarly, the suspension of the naira-for-crude arrangement with the Dangote Refinery, reflected in its recent shift to dollar-denominated fuel sales, may increase pressure on the local currency and drive import-related and pump prices higher.
Food inflation is also expected to remain elevated, driven by persistent insecurity across major farming corridors, particularly in Plateau and Benue, compounded by deteriorating road infrastructure and other logistics constraints that continue to weaken agricultural supply.
On the monetary policy front, the persistence of headline inflation above 15.00% is likely to sustain the MPC s cautious stance at its upcoming meeting, with rate cuts remaining unlikely in the immediate term. On the balance of factors, we do not expect a decline in month-on-month inflation in July 2026, as higher energy prices, food supply constraints and exchange-rate pressures threaten the moderation recorded in June.
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