Nigeria’s inflation outlook is showing mixed signals as easing food prices and improving supply conditions contrast with a resurgence of underlying price pressures, raising concerns about the durability of the country’s disinflation trajectory.Â
While the latest Consumer Price Index (CPI) report from the National Bureau of Statistics (NBS) shows significant progress in reducing inflation compared to a year ago, fresh data indicate that underlying price pressures within the economy remain resilient, potentially complicating expectations of a smooth return to price stability.
Headline inflation rose to 15.93 percent year-on-year in May 2026 from 15.69 percent in April, marking the third consecutive monthly increase since November and reflecting the lingering impact of global price shocks triggered by tensions in the Middle East..
On a month-on-month basis, inflation slowed to 1.75 percent from 2.13 percent in April, indicating that while prices continued to increase, the pace of increase moderated. The easing was largely driven by food prices, which remain the most influential component of Nigeria’s inflation basket.
Food inflation eased significantly, declining to 16.96 percent year-on-year from 24.55 percent recorded in May 2025. Monthly food inflation also moderated to 2.98 percent from 3.63 percent in April as prices of key staples including tomatoes, maize, onions, cassava products, pepper, plantain, cowpea and wheat recorded slower increases.
However, economists are paying closer attention to developments within the core inflation basket.
Core inflation, which excludes volatile food and energy prices and is often viewed as a better measure of underlying inflationary trends, accelerated on a monthly basis to 1.94 percent in May from 1.03 percent in April.
Although the annual core inflation rate declined to 16.82 percent from 24.92 percent a year earlier, the monthly uptick suggests that pricing pressures across non-food sectors remain far from subdued.
A key feature of the May inflation report was the contrasting movement between food and core inflation. Improved food supplies and relative currency stability helped moderate food prices, but higher costs in non-food sectors kept underlying inflationary pressures elevated.Â
Several service-oriented sectors continue to post elevated inflation levels. Restaurants and accommodation services recorded inflation of 24 percent, while personal care, social protection and miscellaneous services stood at 17.8 percent. Health-related inflation also remained elevated at 18.7 percent.
These figures point to persistent cost pressures within segments of the economy that are less dependent on seasonal agricultural cycles and more influenced by wages, transportation costs, energy expenses and business operating conditions.
Compared with the 26.06 percent inflation rate recorded in May 2025, current levels represent substantial progress. The decline reflects improved foreign exchange stability, easing supply-chain disruptions and favourable base effects that have helped moderate price growth over the past year.
However, the recent three-month upward movement in headline inflation, combined with accelerating monthly core inflation, indicates that the path toward sustained price stability may not be entirely straightforward.
Inflationary pressures also remain highly uneven across the country.
Yobe, Anambra and Sokoto recorded the highest annual inflation rates at 24.94 percent, 23.29 percent and 22.60 percent respectively, while Niger, Plateau and Edo posted the lowest annual increases.
Similarly, food inflation varied sharply across states, with Adamawa, Kwara and Rivers recording the highest annual food inflation rates, highlighting the continued influence of regional supply dynamics, logistics challenges and local market conditions on consumer prices.
Analysts at Cowry Research believe the moderation in monthly inflation reflects improving market conditions driven partly by declining global crude oil prices and easing geopolitical tensions following progress in U.S.-Iran negotiations.
According to the firm, improved food supply conditions, seasonal harvests and exchange-rate stability should continue to support a moderation in inflation over the coming months.
The research house expects headline inflation to ease slightly to 15.80 percent in June, helped by the anticipated normalisation of oil shipments through the Strait of Hormuz following the recently announced U.S.-Iran peace agreement.
Lower global oil prices are also expected to reduce domestic energy costs, transportation expenses and production costs for businesses, providing additional relief to consumers.
Nonetheless, Cowry Research warns that significant risks remain. They noted that transportation costs, weather-related disruptions to agricultural production and renewed foreign exchange volatility could quickly reverse recent gains and trigger fresh price increases across the economy.
