Nigeria’s inflation mirage: Food prices fall, but core pressures mount

Nigeria's headline inflation dropped to 14.63% in September 2026, a decline from previous months. However, this decrease is mainly due to falling food prices during the harvest season, while other factors continue to rise. Core inflation, which strips out farm produce and energy, increased by 1.11% month-on-month, leading to an annualized pace of 14.2%.

This is higher than the published annual core rate of 12.95%. Despite the harvest effect, food inflation remains at 19.59% annually, unchanged since August. A Nigerian household spending half its income on food now faces a 20% price increase compared to a year ago. The World Bank's October 2026 Nigeria Development Update highlights that Nigeria's inflation, which fell from 27.6% to 15.2% between 2025 and 2026, has stalled at around 15.5%, more than double the rate of peer countries.

The Central Bank of Nigeria (CBN) cut the Monetary Policy Rate to 23% in September, leaving a wide cushion for further cuts. However, the real return on one-year bills is only 1.27 percentage points after subtracting the harvest effect and using a core pace of about 14.2%. Nigeria's upcoming elections in January could pose a downside risk to economic growth, with the World Bank raising its 2026 growth forecast to 4.3%.

The government should publish a pre-election spending ceiling and keep the fuel market open to prevent fiscal spending from leaching away in the next election period.