Nigeria’s Headline Inflation Rate for July Estimated to Ease
Nigeria’s headline inflation rate is projected to decrease in July, influenced by fluctuating global oil prices, seasonal food harvests, and relative naira stability.
In June, the inflation rate fell to 15.91% year-on-year, reversing the previous trend and reflecting a slight improvement in macroeconomic conditions.
This decline was primarily driven by lower core inflation, which offset rising food prices. Core inflation decreased by 90 basis points to 15.9% in June, down from 16.8% in May, while food inflation rose by 56 basis points to 17.5% year on year, compared to 17.0% in May.
In its latest report, Coronation Research forecasts a headline Consumer Price Index (CPI) inflation of 15.80% year-on-year and 1.90% month-on-month for July, continuing the disinflation trend.
Month-on-month inflation is expected to be slightly higher at 1.90%, up from 1.66% in June, due to a domestic fuel price shock in the latter half of the month, partially offset by early harvest-season relief on staple food prices.
The projected 15.80% year-on-year rate would maintain the disinflation trend for a second consecutive month, although the slight uptick in monthly inflation requires attention as the fuel shock impacts transportation and logistics costs, which are important for the monetary policy committee’s next assessment.
Coronation Group’s July forecast is based on three main factors: renewed energy price shocks due to tensions in the Strait of Hormuz, seasonal relief from declining food prices, and continued naira stability.
In mid-July, tensions in the Strait of Hormuz pushed Brent crude prices above $85–$90 per barrel, up from an average of $85 in June, and disrupted tanker traffic.
Domestically, the Dangote Refinery briefly switched to dollar-denominated pricing in July, leading to a sharp increase in ex-depot prices before returning to naira pricing following government intervention, analysts said.
This caused pump prices to spike to between N1,350 and N1,400 per litre from around N1,230 earlier in the month. The transport sub-index, which was already high in Q2, is expected to accelerate further in July due to increased haulage, logistics, and intra-city fares.
Food and non-alcoholic beverages make up the largest portion of the CPI basket, with a weight of 40.2% under the 2025-rebased CPI. In June, food inflation was reported at 17.52% year on year, with a 3.75% month-on-month increase.
Analysts anticipate that the main harvest season in the northern and middle-belt states will provide some relief for staple foods such as yam, cassava, and tomatoes in July. However, this relief may be countered by higher logistics costs resulting from the late-month fuel price shock.
Core inflation, excluding farm produce and energy, was 15.92% year-on-year in June, remaining stable compared with May, according to the statistics office report.
A slight increase in core inflation is expected in July as the impact of the fuel price shock seeps into service prices, especially for transport, restaurants, and accommodation.
Meanwhile, sub-indices for miscellaneous goods and services and education are likely to remain high, influenced by structural pricing dynamics that the fuel shock will exacerbate rather than alleviate.
The naira maintained a stable trading range in July, fluctuating between roughly N1,362 and N1,383 per dollar at the official NFEM window.
During the month, the rate depreciated from around N1,370 to a peak near N1,383 in the second week, coinciding with the refinery’s dollar pricing, before recovering to about N1,362–1,368 after reverting to naira pricing on July 22.
The parallel market premium followed a similar trend, widening to approximately N45 during the dollar-pricing week before easing back to the low-to-mid N30s by month-end.
This indicates a modest but significant foreign exchange channel operating alongside the direct increase in fuel costs, as it translates into higher consumer prices. CBN Allots N2.6trn as OMO Bills Subscription Tops N4.6trn
