August 18, 2026/Cordros Report
According to recently released data from the National Bureau of Statistics (NBS), Nigeria’s headline inflation eased to 15.43% y/y in July 2026 (June: 15.91% y/y) – its lowest level since April 2026. The moderation in headline inflation masked divergent movements across components: Food inflation accelerated by 279bps to 20.31% y/y (June: 17.52% y/y), while Core inflation eased to 14.97% y/y (June: 15.92% y/y) and accounted for the entire disinflationary lift. Month-on-month inflation extended its downward trend, slowing to 1.57% from 1.66% m/m in June, as a relatively stable naira – averaging NGN1,373.52/USD during the month – contained imported inflationary pressures.
On a month-on-month basis, food inflation increased by 182bps to 5.56% in July (June: 3.75% m/m), the sharpest monthly acceleration of the year and the driver of the y/y food inflation spike. We attribute the increase partly to the lean season, now at its peak, which forces both farming and non-farming households to increasingly rely on market purchases as food stocks are depleted. At the same time, insecurity in key food-producing areas continues to constrain agricultural output. The Middle East conflict has also kept energy prices elevated, with second-order effects on transport costs. Within the food basket, farm produce prices rose to 4.66% m/m (June: 4.42% m/m), while imported food prices increased more slowly at 1.19% m/m (June: 1.73% m/m). This divergence suggests that the food price pressure is predominantly domestic and supply-driven. On a year-on-year basis, food inflation climbed to 20.31% (June: 17.52% y/y). In our view, the data points to a two-speed inflation picture: food prices accelerated even as headline inflation eased. As a result, low-income households, whose consumption baskets are more food-heavy, likely faced greater cost of living squeeze.
Elsewhere, core inflation eased by 151bps to 0.15% m/m (June: 1.66% m/m), a near flat monthly print, while the annual rate fell by 94bps to 14.97% y/y (June: 15.92% y/y). The moderation was led by softer price pressures in housing & water (+0.09% m/m vs June: +2.02% m/m), clothing & footwear (-1.43% m/m vs June: -0.14% m/m) and recreation, sport & culture (-0.43% m/m vs June: +0.31% m/m). Meanwhile, food & non-alcoholic beverages (+3.74% m/m vs June: +3.34% m/m), personal care (+0.65% vs June: +0.41% m/m) and health (+0.47% m/m vs June: +0.28% m/m) recorded the strongest price increases, highlighting continued divergence within the core basket.
Early Harvest to Ease Price Pressures in August
We anticipate that price pressures will ease slightly in August, driven mainly by a firmer naira, which will contain imported food and raw material price pressures, alongside improving seasonal farm produce supply. However, lingering effects of the peak of the lean season, as well as elevated energy and transport costs, are likely to cap the extent of the moderation.
So far, the naira has averaged NGN1,362.26/USD in August (Jul-26: NGN1,373.52/USD), amid improved FX liquidity. Beyond consumer prices, a firmer naira should also lower input costs for FX-exposed firms and, through exchange rate pass through, ease prices of goods and services. We expect the Central Bank of Nigeria (CBN) to continue monitoring the FX market and preventing sharp movements in the naira.
At the same time, farm produce supply – including maize, tubers and vegetables, particularly in Southern Nigeria – should begin improving with the onset of the green harvest, which typically peaks around this time of the year. We expect this seasonal boost, reinforced by a stronger naira, to ease food price pressures in the near term. That said, persistent insecurity in key food producing regions in the North and elevated logistics costs remain as key upside risks to our expectation.
On energy, however, the absence of a lasting ceasefire in the Middle East has kept oil prices above pre-conflict levels. On average, brent prices eased to USD84.97/bbl in August (July: USD87.21/bbl) but remain 20.1% above pre-conflict levels (USD70.75/bbl), keeping domestic retail and gantry fuel prices elevated and sustaining second order effects on transport and logistics costs.
Overall, we expect headline inflation to moderate to 0.69% m/m and 15.37% y/y in August, provided the naira holds near NGN1,365.00/USD. A renewed FX depreciation or a prolonged lean season would pose upside risk and keep the print higher.