Nigeria’s Inflation Falls To 15.39%, But 68% Of Poor Households Still Feel The Squeeze

By FIDELUS ZWANSON

NIGERIA’S inflation rate is showing signs of moderation, but the improvement is not being experienced equally across households and businesses.

Headline inflation slowed to 15.39% year-on-year in August 2026, down marginally from 15.43% in July, according to the National Bureau of Statistics. The figure represents the third consecutive month of moderation.

On the surface, the trend suggests that the economy is gradually moving away from the severe inflationary pressures that characterised the previous two years.

Yet a Central Bank of Nigeria survey tells a more complicated story.

The CBN’s Inflation Expectations Survey for August found that 68.4% of households earning below ₦70,000 still perceived inflation as high. Among households earning above ₦450,000, only 30.8% reported the same experience.

The 37.6-percentage-point gap reveals how differently inflation is being experienced across income groups.

A Falling Rate Does Not Mean Falling Prices

Inflation measures the rate at which prices are increasing. It does not mean that prices automatically return to their previous levels when the inflation rate declines.

That distinction is crucial to understanding why many Nigerians may not feel relief despite the moderation in headline inflation.

In August, headline inflation stood at 15.39%. Food inflation remained considerably higher at 19.57%, although that too declined from 20.31% in July.

Core inflation also moderated, falling to 13.29% from 14.97%.

Month-on-month headline inflation slowed more sharply, from 1.57% in July to 0.71% in August.

Taken together, the figures point to a broad moderation in the pace of price increases.

But for households that devote a large share of their income to food, transport and energy, the level of prices already reached remains more important than the statistical improvement in the annual rate.

The Poor Experience a Different Inflation

The CBN survey highlights the unequal distribution of price pressures.

Among households earning less than ₦70,000 monthly, 68.4% reported experiencing high inflation.

The proportion dropped to 30.8% among households earning more than ₦450,000.

That difference reflects the structure of household spending.

Low-income households typically have less room to adjust when food, transportation, electricity or other essential expenses rise. A larger proportion of their income is committed to basic needs, leaving fewer resources for savings or discretionary spending.

Consequently, even modest increases in essential prices can create substantial financial pressure.

The survey therefore adds an important dimension to the national inflation figure: the average rate does not capture the full experience of every household.

Rural Households Also Feel the Pressure

Location also matters.

According to the survey, 65.7% of rural respondents perceived high inflation, compared with 63.2% of urban respondents.

The difference is narrower than the income gap, but it points to another layer of the inflation problem.

For rural households, food production and consumption are closely connected to transportation, agricultural inputs and local market conditions. Where insecurity disrupts farming or poor roads increase transportation costs, those pressures can eventually be reflected in retail prices.

This helps explain why inflation cannot be understood entirely through monetary indicators.

Businesses Are Under Pressure Too

Households are not the only ones feeling the squeeze.

The CBN survey found significant differences among businesses. Micro businesses reported the highest level of inflation stress, at 101.4%, compared with 57.4% for small businesses and 63.1% for large businesses.

The figures point to the vulnerability of smaller enterprises to rising operating costs.

For many micro businesses, there may be limited access to credit, fewer opportunities to spread fixed costs and little capacity to absorb sudden increases in energy, transportation or input expenses.

The survey also found that 60.1% of firms reported higher expenditure because of inflation, compared with 51.9% of households.

That suggests businesses are facing significant cost pressures even as the national inflation rate moderates.

Energy, Security & Exchange Rates Remain Key Drivers

Respondents identified several factors behind their inflation experience.

Energy costs, insecurity, interest rates and exchange-rate movements featured prominently.

The significance of energy costs is particularly important because electricity, diesel, petrol and transportation affect production and distribution throughout the economy.

Even where fuel availability improves, businesses can continue to face high operating costs from diesel-powered generators, electricity tariffs, logistics and transportation.

Insecurity adds another layer.

When farmers cannot safely reach their fields or transporters face security risks along important routes, production and distribution costs can rise.

These costs eventually feed into consumer prices.

Food Remains the Critical Pressure Point

Food remains central to the inflation debate.

Annual food inflation declined to 19.57% in August from 20.31% in July. Yet the monthly movement of food prices can matter more to vulnerable households than the annual rate.

The source data point to a sharp increase in month-on-month food inflation from 3.75% in June to 5.56% in July.

For households spending more than 60% of their income on food, such movements can have an immediate effect on living standards.

A family may therefore hear that inflation is falling while simultaneously spending more money on rice, vegetables, meat, transportation and other essentials than it did previously.

There is no contradiction in those two experiences.

The inflation rate can fall while the price level remains high.

A Decade of Inflationary Shocks

Nigeria’s present inflation challenge is the product of several years of economic shocks.

Between 2016 and 2017, the commodity-price downturn, foreign-exchange shortages and economic recession contributed to elevated inflation. The rate reached 18.72% in January 2017 before subsequently moderating.

Inflation remained in double digits through much of 2018 and 2019, with food-supply pressures also affected by the closure of Nigeria’s land borders in 2019.

The COVID-19 pandemic then disrupted global supply chains between 2020 and 2022, while currency pressures added to domestic price increases.

The situation intensified after major policy changes in 2023, including the removal of the petrol subsidy and the unification and subsequent liberalisation of foreign-exchange markets.

Headline inflation eventually reached 34.8% in 2024.

From Crisis to Moderation

The inflation trajectory subsequently changed.

The rebasing of the Consumer Price Index by the NBS in January 2025 coincided with a period of tight monetary policy. The CBN raised interest rates aggressively, while inflation began to moderate.

According to the source data, inflation fell below 22% by July 2025 and reached 14.45% in November.

A temporary increase followed in early 2026, with inflation reaching 15.93% in May.

The August figure of 15.39% now represents another period of moderation.

The trend provides grounds for cautious optimism, but it does not automatically mean that households have recovered the purchasing power lost during the inflation surge.

The CBN’s Balancing Act

The CBN has projected average headline inflation of 12.94% for 2026 and has identified a medium-term target range of 6% to 9% as it moves towards a formal inflation-targeting framework.

The challenge is achieving those objectives without overlooking the structural forces pushing up food and production costs.

Monetary policy can influence demand, liquidity and inflation expectations.

It cannot, by itself, secure farms, repair roads, reduce agricultural production costs or eliminate logistics bottlenecks.

That distinction is increasingly important as policymakers consider the next stage of monetary policy.

What the Numbers Mean for Ordinary Nigerians

The August inflation figures show that the pace of price increases is slowing.

The CBN survey, however, shows that the experience of inflation remains uneven.

For higher-income households, moderating inflation may provide some relief.

For low-income families, however, food and transport costs can continue to dominate household budgets. For micro businesses, rising energy and operating costs can threaten already narrow margins.

The central economic question is therefore shifting.

It is no longer only whether Nigeria can bring down headline inflation.

It is whether the moderation can eventually translate into lower and more manageable costs for the households and businesses most exposed to essential-price increases.

Until that happens, the improvement in the headline figure may continue to feel distant from the daily experience of many Nigerians.