Nigeria’s Inflationary rate expected to continue the downward trend

Analysts are expecting Nigeria’s inflationary rate expected to continue the downward trend seen in the last month. Ahead of the August inflation data release on Monday, September 15, we expect the disinflationary trend we have been seeing in year-to-year numbers to continue, with headline inflation easing to 21.45% y/y from 21.88% y/y in July. On a month-on month basis, we project a mild decline to 1.74%. While the harvest season is expected to boost food supply and ease price pressures, structural issues in logistics such as inadequate storage facilities and the poor road network could affect the pace of improvement.

Key Drivers of Nigeria’s Inflation figures

Our inflation projection for August 2025 (month-on-month) is underpinned by four key factors. First, increased food supply from the early harvest, including maize, groundnuts, pumpkins, and vegetables, is expected to ease price pressures in the southern and middle-belt regions. Second, imported food inflation is likely to moderate, supported by naira stability, which closed marginally stronger at ₦1,531.57/US$1 in August, reflecting a mild appreciation of 0.44%. Reduced foreign exchange (FX) volatility also helped lower import costs for processed and packaged foods. Third, energy costs declined modestly, easing production and transportation expenses, though some of this may be offset by persistent logistics issues. Lastly, robust FX liquidity, supported by stronger reserves,
which rose by US$1.91bn to close at US$41.27bn, steady foreign portfolio inflows, and reduced global headwinds, has strengthened market confidence, enabling the CBN to intervene when necessary and sustain near-term currency stability.

Outlook for September Inflation rate

For September, we expect headline inflation to edge lower, supported by sustained foreign exchange stability and easing food prices from the ongoing harvest season. If these tailwinds persist, inflation is likely to remain broadly in line with August levels. However, notable risks remain. Fuel prices may rise amid the disagreement involving Dangote Refinery and the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) over the unionization of Dangote’s truck drivers,
while renewed food price pressures could emerge from flooding that is expected which could damage farmlands and disrupt logistics. These factors may limit the pace of disinflation or keep inflation anchored around 22% y/y. SOURCE: CORONATION MERCHANT BANK