Nigeria's headline inflation rate declined for the third consecutive month to 15.39% in August 2026, down from 15.43% in July. This decline was broad-based, with food inflation, core inflation, and month-on-month inflation all moderating during the month. The moderation in inflation came despite expectations of a rise, and it was driven by several factors, including a favourable base year, appreciation of the naira, and a slowdown in food price increases.
Food inflation, which had been rising for six consecutive months, declined to 19.57% in August from 20.31% in July. While food prices did not actually decrease, the rate of increase slowed down, partly due to the harvest season. Some staple food items recorded notable price declines between August 2025 and August 2026, including Irish potatoes, long-grain rice, flour, cassava flour, and palm oil. The naira's appreciation also contributed to the decline in inflation, as it reduced the cost of imports and eased exchange-rate pass-through into domestic prices.
The month-on-month inflation rate, which is a better indicator of current price pressure, fell sharply to 0.71% in August from 1.57% in July. This suggests that the moderation in inflation was not just due to a base-year effect, but also a genuine slowdown in the pace of price changes. Monthly food inflation dropped to 1.02% from 5.56%, and monthly core inflation turned negative at -0.06% from 0.15%. This indicates that the current price pressure is easing faster than the annual inflation rate suggests.
However, the national inflation figure masks a rural-urban split. Urban inflation declined to 15.88% from 16.12%, while rural inflation rose to 14.23% from 13.77%. Rural month-on-month inflation jumped to 1.79% from 0.78%, while urban monthly inflation fell to 0.28% from 1.90%. This means that not every household felt the same relief, with rural areas experiencing higher price increases during the month.
Inflation also varied sharply by state, with Lagos recording the highest headline rate at 23.68%, followed by Zamfara and Enugu. Sokoto had the lowest rate at 2.11%, followed by Kebbi and Jigawa. Food inflation also spread wide, with Adamawa having the highest rate at 38.85%, followed by Zamfara and Bayelsa. Borno, Jigawa, and Kebbi recorded relatively low food inflation rates. This highlights the importance of location in determining the impact of inflation on households.
For households, the decline in inflation brings relief, especially on staple food items. However, the inflation rate of 15.39% still means that prices are well above where they stood a year earlier. Falling inflation means that prices are rising more slowly, not falling. Households in states with high food inflation rates continue to feel the squeeze, and it is only if this moderation in inflation holds for several months that budgets will become more predictable.
For investors, the decline in inflation provides a friendlier backdrop, but it is not yet a signal for a policy shift. Lower inflation eases pressure on input costs, and naira stability reduces uncertainty around imports and foreign-currency obligations. Core inflation, which excludes food and energy, fell to 13.29% from 14.97%, reinforcing that underlying price pressure is genuinely easing. Investors will watch whether this trend holds against renewed energy costs and supply pressures.
Key points
- The decline in inflation was driven by moderation in food, core, and month-on-month inflation.
- The relief from inflation varies by location, with urban areas experiencing lower inflation than rural areas.
- The inflation rate of 15.39% still means that prices are well above where they stood a year earlier.
