Headline Inflation Rate for August Projected to Decline
Nigeria’s headline inflation rate has been projected to decline ahead of data release scheduled for Monday.The inflation rate has been on the decline following the rebasing of the consumer price index (CPI) as Nigeria continues its reform agenda.
For September, Coronation Merchant Bank research units revealed expectation that headline inflation will edge lower, supported by sustained foreign exchange stability and easing food prices from the ongoing harvest season.
Analysts said if these tailwinds persist, inflation is likely to remain broadly in line with August levels, adding that 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, according to Coronation Research may limit the pace of disinflation or keep inflation anchored around 22% year on year. “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, the research unit projected a mild decline to 1.74%. The firm stated that 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.
“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”, Coronation stated. #Headline Inflation Rate for August Projected to Decline Benchmark Yield on Nigerian Bonds Falls to 16.68%
