July 16, 2026/Cordros Report
According to recently released data from the National Bureau of Statistics (NBS), Nigeria’s headline inflation slowed marginally by 2bps to 15.91% y/y in June 2026 (May: 15.93% y/y), broadly in line with our expectations. The moderation was driven by a deceleration in core inflation (15.92% y/y vs May: 16.82% y/y) which offset the acceleration in food inflation (17.52% y/y vs May: 16.96% y/y). On a month-on-month basis, inflation slowed for the third consecutive month to 1.66% from 1.75% m/m in May, primarily reflecting softer energy prices and a broadly stable exchange rate which helped contain price pressures.
On a month-on-month basis, the food index increased by 56bps to 3.75% in June (vs May: 2.98%), reflecting heightened food price pressures. We attribute this to seasonal supply constraints primarily due to the lean season, while persistent insecurity challenges in key food-producing areas also continued to weigh on output. Within the food basket, prices of farm produce accelerated by 4.42% m/m (May: 0.85% m/m), while imported food prices moderated by 1.73% m/m (May: 2.27% m/m), reflecting the impact of continued currency stability. On a year-on-year basis, food inflation accelerated to 17.52% (May: 16.96% y/y).
Elsewhere, core inflation moderated by 28bps to 1.66% m/m (May: 1.94% m/m), bringing the annual rate down to 15.92% (May: 16.82% y/y). This was primarily driven by softer price pressures in the insurance and financial services (-0.06% m/m vs May: +1.45% m/m), recreation, sport and culture (+0.31% m/m vs May: +1.72% m/m), alcoholic beverages, tobacco & narcotics (+0.01% m/m vs May: +0.88% m/m) and restaurants & accommodation services (+0.28% m/m vs May: +1.40% m/m) sub-components. On the other hand, prices rose at a faster pace across miscellaneous goods & services (+0.41% m/m vs May: +0.28% m/m), and transport (+0.77% m/m vs May: +0.68% m/m) sub-components.
Mild Price Pressures to Persist, but Inflation Remains Broadly Contained
Looking ahead, we expect a mild increase in consumer prices on a month-on-month basis, reflecting still-elevated energy costs, modest naira depreciation and lean-season pressures on food supply.
Specifically, energy price developments have been mixed. The ceasefire agreement signed between the US and Iran on June 17 initially pushed oil prices down from USD82.84/bbl to a trough of USD71.57/bbl, supporting a moderation in domestic PMS (petrol) prices. However, the resumption of hostilities has reignited concerns over potential supply disruptions and pushed oil prices back above USD85.00/bbl. This rebound limits the scope for further declines in domestic energy costs and raises the risk of renewed increases in pump prices if global energy prices remain elevated.
We also note the recent depreciation of the Naira, which has averaged NGN1,376.38/USD so far in July (June: NGN1,367.32/USD), largely due to seasonal FX demand. In addition, Dangote Refinery’s shift to US dollar-denominated fuel sales introduces an additional source of exchange rate sensitivity. Further currency weakness could raise fuel prices and increase the cost of imported food, raw materials and consumer goods, reinforcing exchange rate pass-through to inflation. Although we expect the CBN to contain sharp currency movements, gradual naira depreciation could still exert moderate pressure on consumer prices.
Food price pressures are also likely to persist as the lean season constrains the supply of key agricultural produce, particularly in northern food-producing regions. While the green harvest in the food-producing region in the South may provide some relief, its impact is unlikely to fully offset broader supply shortages before the main harvest season begins in September.
Accordingly, we expect inflation to rise to 1.97% m/m in July (June: +1.66% m/m). Nevertheless, the annual inflation rate is expected to moderate slightly to 15.89% y/y (June: 15.91% y/y), reflecting a favourable base effect rather than any material improvement in price dynamics.