Analysts see inflation slowing further despite rising food prices

Nigeria's headline inflation slowed to 15.43 per cent year-on-year in July 2026, down from 15.91 per cent in June, and analysts at Comercio Partners expect the downward trend to continue in the coming months. They said easing core inflation and reduced exchange rate volatility are offsetting persistent pressure from food prices.

The latest data from the National Bureau of Statistics showed the second consecutive monthly moderation in headline inflation. It was also the sharpest slowdown recorded so far this year, according to the analysts.

Core inflation eases sharply

Comercio Partners noted that the July figures point to a growing concentration of inflationary pressure in volatile food-related categories, rather than a broad-based acceleration in prices across the economy. Core inflation, which excludes some volatile components, fell sharply to 14.97 per cent in July from 15.92 per cent in June. On a month-on-month basis, core inflation dropped to 0.15 per cent from 1.66 per cent.

The analysts said the moderation in core inflation suggests price pressures are weakening, particularly as exchange rate volatility has reduced.

Food inflation remains a structural weakness

Food inflation remains a major concern. It rose to 20.31 per cent year-on-year in July from 17.52 per cent in June, while the month-on-month rate climbed to 5.56 per cent from 3.75 per cent. Comercio Partners attributed the renewed food price pressure to agricultural supply constraints, logistics and distribution costs, seasonal factors and broader structural bottlenecks that cannot be resolved through monetary policy alone.

“Food inflation remains a structural weakness,” the analysts said, noting that food accounts for a significant share of household expenditure, particularly among low- and middle-income households.

Despite the food inflation surge, the broader headline rate moderated because of lower contributions from several major expenditure categories. The contribution of food and non-alcoholic beverages to headline inflation fell from 6.37 percentage points in June to 6.18 percentage points in July. Restaurants and accommodation declined from 2.06 percentage points to 1.99 percentage points, while transport fell from 1.70 percentage points to 1.64 percentage points. Housing, utilities and fuels also declined from 1.34 percentage points to 1.30 percentage points.

The analysts said the combined reduction in contributions from these four major divisions accounted for roughly 75 per cent of the 0.48 percentage-point decline in headline inflation. On a month-on-month basis, headline inflation also eased to 1.57 per cent in July from 1.66 per cent in June, despite the sharp increase in food inflation.

Election spending could slow disinflation

Comercio Partners expects headline disinflation to continue gradually, supported by sustained moderation in core inflation and a more stable foreign exchange market. However, the analysts warned that the outlook could be challenged by rising political activity and election-related spending. They said increased demand for food, transportation, accommodation and foreign exchange as political activities intensify could generate fresh inflationary pressures and slow the pace of disinflation.

For the naira and consumers, the mix is mixed. Slower core inflation and a steadier FX market support the disinflation story, but stubborn food inflation keeps the cost of living under pressure, especially for low- and middle-income households.