Nigeria’s inflation is set for Fifth month of decline as FX stability and harvest boost the economy.

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Ahead of the official release of August inflation figures, Coronation Asset Management has predicted that Nigeria’s inflation rate will continue its downward trend, driven largely by a stable foreign exchange market and increased food supply from the harvest season.

The National Bureau of Statistics is set to publish the August inflation report today (Monday), with expectations that the decline will mark five straight months of easing price pressures.

Nigeria’s inflation rate dropped for the fourth month in a row in July 2025, settling at 21.88 per cent year-on-year, down from 22.22 per cent in June. Compared with July 2024, when inflation stood at 33.40 per cent, the figure represented a drop of 11.52 percentage points, offering much-needed relief to households and businesses.

Food inflation showed a mixed picture, recording 22.74 per cent year-on-year in July, significantly lower than 39.53 per cent in July 2024. On a month-to-month basis, food prices rose 3.12 per cent, slightly below the 3.25 per cent rise in June. Analysts attributed this moderation to falling average prices of vegetable oil, white beans, local rice, maize, and wheat flour.

Core inflation, which excludes volatile items such as food and energy, slowed to 21.33 per cent in July from 27.47 per cent a year earlier. On a month-to-month basis, it declined sharply to 0.97 per cent from 2.46 per cent in June, reflecting reduced pressure on non-food items

Coronation Asset Management projected that August inflation will ease further to 21.45 per cent year-on-year, with month-on-month inflation expected to dip to 1.74 per cent. “Our inflation projection for August 2025 (month-on-month) is underpinned by four key factors,” the analysts explained.

They outlined these factors as follows: “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 N1,531.57/$1 in August, reflecting a mild appreciation of 0.44 per cent. Reduced foreign exchange 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 $1.91bn to close at $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.”

Looking ahead, however, the analysts flagged potential risks for September. “Fuel prices may rise amid the disagreement involving Dangote Refinery and the Nigeria Union of Petroleum and Natural Gas Workers over the unionisation 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 per cent y/y,” they maintained.

Meanwhile, AIICO Capital, in its July Inflation Watch, suggested that if the downward inflation trend continues, the Central Bank’s Monetary Policy Committee may consider a rate cut when it meets later this month

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