The latest moderation in Nigeria’s headline inflation may strengthen calls for a reduction in the Monetary Policy Rate (MPR) when the Central Bank of Nigeria’s Monetary Policy Committee (MPC) meets in September.

However, according to details of the data contained in the National Bureau of Statistics (NBS) released yesterday in Abuja, the sharp increase in food prices could limit the scope for monetary easing.

The Consumer Price Index (CPI) report for July showed that headline inflation fell to 15.43 per cent from 15.91 per cent in June.

The decline represents a 0.48 percentage-point reduction in the year-on-year inflation rate. It was also significantly lower than the 24.94 per cent recorded in July 2025.

On a month-on-month basis, however, the rate of increase in prices remained positive, with headline inflation standing at 1.57 per cent in July, compared with 1.66 per cent in June.

The figures present a mixed inflation outlook for the CBN as the MPC prepares for its September meeting.

While the moderation in headline inflation suggests price pressures may be easing, the food component of the CPI remains a major concern for households and policymakers.

Food inflation rose to 20.31 per cent year-on-year in July, while its month-on-month rate increased sharply to 5.56 per cent from 3.75 per cent in June.

The NBS attributed the monthly increase in food prices to movements in the prices of commodities including crayfish, fresh pepper, onions, carrots, rice, water yam, tomatoes, garri, plantain, beef, eggs, guinea corn and ginger.

Food and non-alcoholic beverages also remained the largest contributor to headline inflation, accounting for 6.18 per cent of the year-on-year increase. Restaurants and accommodation services contributed 1.99 per cent, transport 1.64 per cent, while housing, water, electricity, gas and other fuels contributed 1.30 per cent.

The core inflation measure, which excludes volatile agricultural produce and energy, also declined to 14.97 per cent year-on-year in July from 23.95 per cent recorded in July 2025. On a month-on-month basis, core inflation fell to 0.15 per cent from 1.66 per cent in June.

The development could increase expectations that the CBN may consider reducing its policy rate if the moderation in underlying inflation is sustained.

However, the continued rise in food prices could hinder an aggressive rate cut. Monetary policy tightening can influence demand and financial conditions, but it has limited direct impact on supply-side factors responsible for food-price increases.

The disparity between headline and food inflation figures therefore leaves the MPC with a difficult policy balance: easing monetary conditions to support economic activity while avoiding premature relaxation that could reverse progress in containing broader inflationary pressures.

The July figures also show that inflationary pressures remain uneven 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 recorded the lowest at 7.86 per cent, while Kebbi and Borno recorded 9.12 per cent each.

Food inflation was particularly high in Adamawa, where it reached 51.36 per cent year-on-year, followed by Katsina at 30.84 per cent and Zamfara at 30.65 per cent.

The figures suggest that despite the improvement in the national headline rate, households’ inflation experience remains substantially different across states, particularly on food prices.

For the September MPC meeting, therefore, August inflation, developments in food prices, exchange-rate stability, and other domestic and external price pressures are likely to be critical in determining whether the committee maintains its restrictive stance or begins a gradual reduction in the MPR.

The July CPI report provides some support for a more accommodative monetary policy, particularly with the decline in headline and core inflation. But accelerating monthly food inflation means the September decision is unlikely to be based on the headline figure alone.

The central policy question for the CBN will be whether the recent decline in inflation represents a durable disinflationary trend or merely a temporary moderation, and whether conditions are stable enough to reduce borrowing costs without reigniting price pressures.