September 16, 20206/Cordros Report
According to data from the National Bureau of Statistics’ (NBS) Consumer Price Index (CPI) report, Nigeria’s headline inflation eased for the third consecutive month to 15.39% y/y in August 2026 (July: 15.43% y/y). Notably, the print came in 2bps above our estimate of 15.37% y/y. The moderation was supported by lower food inflation, which eased to 19.57% y/y in August (July: 20.31% y/y), while core inflation moderated more sharply to 13.29% y/y (July: 14.97% y/y). At the same time, month-on-month inflation slowed to 0.71% in August (July: 1.57% m/m), its lowest positive reading since November 2025, likely reflecting seasonal improvements in food supply and appreciation of the naira. The average exchange rate strengthened by 2.1% m/m to NGN1,325.77/USD, despite volatile energy price movements during the month.
On a month-on-month basis, food inflation slowed sharply to 1.02% in August from 5.56% in July, a decline of 454bps, reversing much of the price pressures associated with the lean-season over the last two months. Within the food basket, prices for farm produce and imported food moderated to 1.35% m/m (July: 4.66% m/m) and 0.91% m/m (July: 1.19% m/m), respectively. In our view, the moderation in m/m food inflation was likely supported by increased supplies as the early harvest season commenced. At the same time, continued FX avaibility and naira appreciation helped contain imported food price pressures. The average exchange rate strengthened to NGN`1,325.77/USD in August from NGN1353.50/USD in July, supporting lower costs for raw materials and other FX-sensitive inputs. On a year-on-year basis, food inflation eased to 19.57% y/y (July: 20.31% y/y).
Elsewhere, the core index declined by 0.06% m/m in August (July: +0.15% m/m), while it eased by 168bps to 13.29% y/y (July: 14.97% y/y). The moderation was driven by weaker price pressures in food and non-alcoholic beverages (+1.78% m/m vs July: +3.74% m/m), transport (-0.52% m/m vs July: +0.27% m/m) and health (+0.19% m/m vs July: +0.47% m/m). Conversely, clothing & footwear (+0.01% m/m vs July: -1.43% m/m), recreation (+0.34% m/m vs July: -0.43% m/m) and furnishing & household equipment (+0.00% m/m vs July: -0.31% m/m) recorded the largest upward price movements relative to July. In our view, the moderation was supported by the appreciation of the naira, which helped contain imported costs, while continued tight financial conditions and subdued household purchasing power constrained firms’ ability to pass higher costs through to consumers. Although energy prices are excluded directly from the core index, the relative stability of petrol prices during most of August likely provided indirect relief through lower transport, distribution and operating costs. Moreover, given that the cumulative NGN100.00/litre increase in the Dangote Refinery’s gantry price occurred between 21 and 30 August, its full pass-through to consumer prices may not have been captured in the August inflation print. That said, the August print suggests a temporary easing in underlying price pressures rather than a broad-based decline in consumer prices.
Energy Price Pressures May Interrupt the Moderation
We expect inflation to rise moderately in September, as renewed fuel price pressures could partly offset the disinflationary impact of the main harvest season and continued naira appreciation. Food inflation should remain relatively contained as increased supplies of grains, tubers and vegetables improve market availability. However, insecurity and elevated distribution costs may limit the extent of the moderation in food price pressures.
On energy prices, renewed tensions in the Middle East have contributed to higher Brent prices, which have averaged c.USD100.42/bbl so far in September (August: USD87.35/bbl). The increase has already filtered into domestic fuel prices, with Dangote Refinery raising its petrol gantry price by NGN85.00 (+6.7%) to NGN1,350.00/litre from NGN1,265.00/litre at the end of August. Consequently, pump prices have increased across major retail outlets, reaching as high as NGN1,450.00/litre in some regions, raising the risk of second-order effects on transport, logistics and operating costs.
Meanwhile, the naira has appreciated by c.2.1% m/m, averaging NGN1,325.77/USD so far in September (August: NGN1,353.50/USD), supported by improved FX liquidity. We expect improved FX liquidity to support exchange rate stability and help contain the costs of imported food, raw materials and other FX-sensitive inputs.
Overall, we expect m/m headline inflation to rise marginally by 2bps to 0.73% in September (August: 0.71% m/m), reflecting the net effect of higher energy and transport costs, that is likely to offset the favourable impact of improved food supply and the stronger naira. Accordingly, we expect the y/y rate to settle at 15.40% in September (August: 15.39% y/y).