• High food prices traced to import programme, seasonal impacts
• ‘Inflation may rise to 20 per cent if cost pressure continues’

Nigeria’s headline inflation was stagnant in June, with an insignificant 0.02 percentage points easing, but the intensity of price change slowed to a five-month low, suggesting the price pressure could be gradually losing its grip.

According to the latest consumer price index (CPI) released yesterday by the National Bureau of Statistics (NBS), the headline figure slowed from 15.93 per cent to 15.91 per cent, implying an indecisive movement of the year-on-year trend.

But the month-on-month movement, which defines the intensity of price change, offers some hope to price-hike-wary Nigerians.

In June, the month-on-month inflation eased to 1.66 per cent, the slowest since January when it turned negative (-2.88 per cent).

From February, the month-on-month change chart exhibited extreme volatility. The figure rose from 2.01 per cent in February to 4.18 per cent in March, then decelerated to 2.13 per cent in April. In the past three months, the economy has slowed, dropping to 1.75 per cent in May before a further drop in June.

The month-on-month chart suggests that headline inflation may have entered a more predictable growth pattern, all else being equal.

But there are worries that the fresh energy price crisis could reset the inflation movement. On Monday, Dangote Petroleum Refinery and Petrochemicals, the biggest in the continent with significant market control, changed the sale invoicing currency to dollars, a decision that pushed depot prices up by over N100 per litre.

Analysts already predicted the change could distort the foreign exchange market and weaken the position of the naira. A weaker naira could increase the cost of imported goods and raise inflation expectations. Both a weaker naira and more costly energy could feed into the inflation basket in the coming months, experts have warned.

Already, a professor of capital markets at Nasarawa State University, Uche Uwaleke, said the inflation rate could rise to as high as 20 per cent if the pressure continues. In the best-case scenario, he said, the country could see a 12 per cent inflation rate, an unlikely possibility.

Speaking at a mid-year macroeconomic review and investment outlook for the second half (H2) organised by Arthur Stevens Asset Management Limited, Uwaleke said his base-case projection suggested inflation would remain elevated due to lingering insecurity, exchange rate pressure, geopolitical tensions, food supply disruptions, and pre-election spending.

According to him, inflation and exchange rate movements are closely linked, as a stronger naira would help to moderate inflation through lower import costs, while persistent depreciation of the local currency would continue to fuel price increases.

At 15.91 per cent, the inflation rate is a significant drop from the 25.29 per cent recorded in June last year, reflecting continued year-on-year moderation. The current trend is already over-performing the Federal Government’s 16.5 per cent projection as contained in the 2026 appropriation. The International Monetary Fund (IMF) also expects the country’s inflation rate to close at an average of 16 per cent this year.

But the figure is still significantly higher than the Central Bank of Nigeria’s (CBN) single-digit long-term target. Nigeria has not seen a single-digit inflation rate since 2015.

According to the CPI, the food segment, a key driver of the headline inflation, stood at 17.52 per cent in June, lower than the 25.41 per cent recorded in the corresponding period of 2025.

Understandably, food inflation accelerated to 3.75 per cent in June from 2.98 per cent in May, indicating a significant seasonal impact and higher logistics costs driven by elevated energy costs.

According to the NBS, the increase was driven by higher food prices for items such as crayfish, fresh pepper, fresh tomatoes, dried green peas, and yam tubers.

The World Food Programme (WFP) had warned that about 35 million Nigerians are projected to face acute and severe food insecurity during the 2026 lean season.

The WFP said in northern Nigeria alone, over 17 million people across nine conflict-affected states are in crisis, emergency or catastrophic levels of hunger.

Core inflation, which excludes the price of volatile farm produce and energy, also showed signs of easing. It stood at 15.92 per cent year-on-year in June, down from 25.41 per cent in the same period last year, while the monthly rate declined to 1.66 per cent from 1.94 per cent in May.

While the latest inflation figures suggest that underlying price pressures are gradually easing, persistent high food inflation indicates that many households are yet to feel meaningful relief.

The disparity between slowing headline inflation and rising food prices highlights the uneven nature of Nigeria’s disinflation process. While overall inflation appears to be slowing, food costs, which account for a significant share of the household consumption basket, particularly among low-income earners, remain elevated.

Not all analysts believe the recent moderation in inflation will be sustained. Standard Chartered Bank recently adopted a more cautious outlook, revising its average inflation forecast for Nigeria in 2026 upward to 15.5 per cent from an earlier projection of 12 per cent. It also raised its 2027 forecast to 14.7 per cent from 13.8 per cent.

The President of the Nigeria Agro Business Group (NABG), Kabir Ibrahim, said food inflation could worsen in the coming months. He attributed the food shortage to the government’s food importation programme, saying the government did not consider the medium- to long-term impact of the policy option.

“The imported food forced the prices down, while the cost farmers incurred to produce locally was rising at a level that stripped the farmers of all the profit they would have made. That discouraged many of them from farming. Now prices are rising because the government has realised that it cannot continue to import food.”

Ibrahim, who is the immediate past President of the All-Farmers Association of Nigeria (AFAN), said it was heart-warming that the government has started distributing free fertilisers to farmers “even though it is coming late”.