September 17, 2026/InvestmentOne Report
National Bureau of Statistics (NBS) reported that headline inflation moderated to 15.39% YoY in August 2026, 4bps lower than the 15.43% recorded in July, extending the recent disinflation trend. However, the decline was modest relative to the sharper moderation in food and core inflation, as higher energy prices partly offset their disinflationary impact.
The moderation was more pronounced on a monthly basis, with headline inflation slowing by 86bps to 0.71% Month-on-Month (MoM) from 1.57% in July, indicating a softer pace of broad-based price increases. Food and non-alcoholic beverages remained the largest contributor to annual inflation, accounting for 6.16ppts of the headline rate, while transport and housing-related costs contributed 1.64ppts and 1.30ppts, respectively.
In the near term, we expect headline inflation to sustain its recent downward trend, supported by improved food supply from the harvest season and continued moderation in underlying price pressures. However, the pace of disinflation is likely to remain gradual as energy costs rise; average petrol and diesel prices have risen to over N1,470.00/litre and N1,900.00/litre, respectively, as of mid-September, up 15.00% and 17.00% from a month earlier.
These increases should feed through to transport, logistics and distribution costs. In addition, seasonal back-to-school spending by households and early stockpiling by retailers and households ahead of the festive season could temporarily strengthen demand, creating pockets of price pressure. On balance, we still expect year-on-year inflation to trend lower in September, albeit at a slower pace, while month-on-month inflation may firm modestly. The sustained disinflation trend supports the case for a less restrictive monetary policy stance, although the MPC may remain cautious given emerging energy and seasonal demand risks.
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