CBN faces September rate decision as inflation eases to 15.43%

Nigeria's headline inflation slowed to 15.43 per cent in July, raising fresh calls for a cut in the Monetary Policy Rate when the Central Bank of Nigeria's MPC meets in September. But the latest NBS data shows food prices are still rising sharply, leaving limited room for aggressive easing.

The Consumer Price Index report released yesterday in Abuja put July headline inflation at 15.43 per cent, down from 15.91 per cent in June. That is a 0.48 percentage-point drop year-on-year, and significantly lower than the 24.94 per cent recorded in July 2025. On a month-on-month basis, prices still rose, with headline inflation at 1.57 per cent in July against 1.66 per cent in June.

Food prices remain a problem

The mixed picture complicates the MPC's September decision. Food inflation climbed to 20.31 per cent year-on-year in July, while the month-on-month rate jumped to 5.56 per cent from 3.75 per cent in June. The NBS linked the monthly increase to higher prices for crayfish, fresh pepper, onions, carrots, rice, water yam, tomatoes, garri, plantain, beef, eggs, guinea corn and ginger.

Food and non-alcoholic beverages remained the biggest driver of headline inflation, contributing 6.18 per cent of the year-on-year rise. Restaurants and accommodation services added 1.99 per cent, transport 1.64 per cent, and housing, water, electricity, gas and other fuels contributed 1.30 per cent.

Core inflation, which strips out volatile farm produce and energy, also fell to 14.97 per cent year-on-year in July from 23.95 per cent in July 2025. Month-on-month core inflation dropped to 0.15 per cent from 1.66 per cent in June.

Uneven pressures across states

The July figures show big differences across the country. Adamawa recorded the highest headline inflation at 33.03 per cent, followed by Yobe at 25.21 per cent and Anambra at 23.99 per cent. Nasarawa had the lowest at 7.86 per cent, while Kebbi and Borno recorded 9.12 per cent each.

Food inflation was especially severe in Adamawa, reaching 51.36 per cent year-on-year. Katsina followed at 30.84 per cent and Zamfara at 30.65 per cent. So while the national rate is improving, households in many states still face much higher price pressure, particularly on food.

What happens at the September MPC

The policy dilemma is clear. Easing monetary conditions could support economic activity, but a premature cut may reverse progress on broader inflation. Monetary policy has limited direct impact on supply-side factors driving food prices, so the MPC must weigh the decline in headline and core inflation against accelerating monthly food inflation.

August inflation, food price trends, exchange-rate stability and other domestic and external pressures will shape the committee's decision. The core question for the CBN is whether the recent drop in inflation is a durable disinflationary trend or just a temporary moderation, and whether borrowing costs can be reduced without reigniting price pressures.