August 18, 2026/InvestmentOne Report
National Bureau of Statistics (NBS) reported that headline inflation declined to 15.43% Year-on-Year (YoY) in July 2026, 48bps lower than the 15.91% YoY recorded in June, driven by a combination of relatively stable energy inflation, and decline in core inflation when compared to the previous periods.
Similarly, on a monthly basis, the continued deceleration in the pace of monthly prices was evident, with month-on-month (MoM) headline inflation declining to 1.57% in July from 1.66% in June, mainly due to the deceleration in Energy inflation (-239bps), clothing and footwear (-143bps) and furnishings and household maintenance (-31bps).
Looking ahead, In August 2026 we expect headline inflation to sustain its downward trend by 10-30 bps, supported by favourable base effects, relative stability in the Naira and continued moderation in core and energy inflation. Although food prices may remain elevated due to insecurity, high logistics costs and seasonal supply constraints, the gradual onset of the harvest season, and normalization of fertilizer and raw material cost based on IMF forecasts should provide some relief to agricultural prices.
Furthermore, stable domestic fuel prices and reduced exchange-rate pass-through cost should also help contain broader price pressures. On the monetary policy front, we expect the CBN to retain the Monetary Policy Rate at its current level of 26.5% in the near term. The sustained decline in inflation should tilt the monetary authorities towards a more dovish stance.
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