October 16, 2026/Cordros Report
According to the National Bureau of Statistics (NBS), Nigeria’s headline inflation eased for the fourth consecutive month to 14.63% y/y in September (August: 15.39% y/y), coming in 77bps below our estimate (15.40% y/y). The moderation reflected a decline in core inflation to 12.95% y/y (August: 13.29% y/y), while food inflation edged up marginally to 19.59% y/y (August: 19.57% y/y). On a month-on-month basis, headline inflation slowed markedly to 0.06% (August: 0.71%). Lower food prices and naira appreciation (the average exchange rate strengthened to NGN1,327.67/USD vs NGN1,353.50/USD in August) likely contributed to the moderation, partly offsetting renewed energy and transport cost pressures.
On a month-on-month basis, the food index declined sharply by 257bps to -1.55% in September (August: +1.02% m/m). Within the food basket, farm produce prices fell by 2.86% m/m (August: +1.35% m/m), likely reflecting higher seasonal harvest supplies. We believe subdued purchasing power also constrained farmers’ ability to pass higher haulage costs on to consumers. Meanwhile, imported food prices rose by just 0.04% m/m (August: +0.91% m/m), potentially reflecting improved FX availability and naira appreciation (September average: NGN1,327.67/USD vs August average: NGN1,353.50/USD), which helped to contain the cost of raw material and other FX-sensitive inputs. Despite the monthly decline, food inflation edged up by 2bps to 19.59% y/y in September (August: 19.57% y/y), indicating that underlying food-price pressures remain elevated.
Elsewhere, core inflation (which excludes farm produce and energy prices) accelerated sharply by 117bps to +1.11% m/m (August: -0.06% m/m), signalling a sharp pickup in monthly price growth across the remaining CPI basket. The acceleration was concentrated in transport (+1.47% m/m vs August: -0.52% m/m), education services (+1.79% m/m vs August: +0.17% m/m) and housing & water (+0.62% m/m vs August: -0.19% m/m). By contrast, monthly price growth slowed in information & communication (+0.05% m/m vs August: + 0.41% m/m), clothing & footwear (-0.25% m/m vs August: +0.01% m/m) and furnishings & household equipment (-0.36% m/m vs August: +0.00% m/m). We consider higher fuel costs a potential contributor to the acceleration, as increased transport and general operating expenses may have begun to passthrough to prices across the economy, following Dangote Refinery’s increase in its petrol gantry price to NGN1,350.00/litre. Although the gantry price subsequently reduced to NGN1,325.00/litre, it remained above the end-August level of NGN1,265.00/litre, leaving fuel costs higher than at the end of the previous month. Despite the monthly acceleration, the y/y core inflation continued to moderate, easing to 12.95% (August: 13.29% y/y).
Improved Food Supply to Support Further Disinflation
In the near term, we expect headline inflation to moderate further on a y/y basis in October, although the monthly rate is likely to rise. Our outlook reflects continued improvements in food supply and relative exchange rate stability, with a potential easing in energy prices providing additional relief to cost pressures.
The m/m decline in farm produce prices in September suggests that seasonal supply improvements are beginning to reach markets. On that note, we expect this trend to extend into October as the harvest seasons progresses, improving food availability and potentially intensifying competition among suppliers. That said, persistent insecurity and elevated transport costs could constrain distribution and limit further declines in food prices.
Despite recent demand pressures, the exchange rate has remained broadly stable so far in October, supported by CBN intervention and resilient autonomous FX inflows. The average exchange rate weakened marginally to NGN1,331.92/USD in first 15 days of October (September average: NGN1,327.67/USD). Assuming the relative naira stability persists, we expect exchange-rate pressures on imported food, raw materials and other FX-sensitive inputs to remain contained, although their domestic prices will also depend on the external prices and distribution costs.
Meanwhile, government measures to contain domestic fuel costs could provide some relief despite Brent prices. We expect the Nigerian National Petroleum Company Limited’s (NNPC Ltd) temporary NGN66.00/litre discount to reduce petrol costs for eligible customers, while the proposed NGN1,350.00/litre ceiling on landing costs could limit further cost increases if implemented. Together, these measures may moderate pressure on transport and distribution costs, although the pass-through of earlier fuel price increases could delay the impact on consumer prices.
Overall, we forecast headline inflation at 0.84% m/m in October (September: +0.06% m/m), while the y/y rate moderates further to 14.53% (September: +14.63% y/y). The projected increase in monthly inflation reflects the potential persistence of transport and distribution costs, although the expected contribution from food prices will depend on whether seasonal supply improvements offset other food-market pressures. However, improved seasonal food supply and relative exchange rate stability should help to contain current prices pressures. The further moderation in y/y inflation will also depend on how October’s price movements compared with those recorded in the corresponding period of last year.