By OBIOMA TORI

Nigeria’s Inflation Falls to 14.63% as Food Prices Drop, Raising Hopes for Rate Cuts

NNIGERIA’S headline inflation rate fell to 14.63 per cent in September 2026, extending the slowdown in annual price growth as declining food prices eased some pressure on households and businesses. The latest figure, released by the National Bureau of Statistics (NBS), represents a decline from 15.39 per cent in August and 20.98 per cent in September 2025.

The outcome also came in below Cowry Research’s forecast of 15.19 per cent, suggesting that inflation moderated more sharply than analysts had anticipated. Nevertheless, although the figures offer grounds for cautious optimism, they do not necessarily mean that the overall cost of living has fallen to a comfortable level.

Monthly Inflation Slows to 0.06%

On a month-on-month basis, headline inflation dropped to 0.06 per cent in September from 0.71 per cent in August. This indicates that the average price level across the measured consumer basket increased much more slowly during the review period.

However, a slower inflation rate does not automatically mean that goods and services have become cheaper across the board. Rather, it indicates that prices are rising at a slower pace overall, while individual products may record increases or decreases.

Against this backdrop, the September figures could strengthen the case for further monetary easing by the Central Bank of Nigeria (CBN). At its September meeting, the Monetary Policy Committee reduced the Monetary Policy Rate (MPR) by 350 basis points to 23.00 per cent, signalling a less restrictive approach amid moderating inflation.

Even so, policymakers will need to weigh the latest improvement against other economic risks, including exchange-rate stability, liquidity conditions and the possibility that inflation could accelerate again.

Falling Food Prices Provide Relief

Food prices played a significant role in September’s inflation slowdown. Annual food inflation stood at 19.59 per cent, while month-on-month food inflation fell to -1.55 per cent from 1.02 per cent in August.

The negative monthly figure indicates that food prices, on average, declined during the period. According to the report, lower prices for local rice, maize flour, guinea corn flour, onions, tomatoes, palm oil and plantain contributed to the improvement.

This development matters because food absorbs a substantial share of household expenditure in Nigeria, particularly among lower-income families. Consequently, sustained reductions in food prices could help households stretch their incomes further and ease pressure on basic living expenses.

Businesses could also benefit if lower food costs help moderate wage pressures and other operating expenses. However, the annual food inflation rate of 19.59 per cent shows that food remained considerably more expensive than a year earlier.

Therefore, the monthly decline should not be mistaken for a complete reversal of the increases households have experienced over the past year.

Core Inflation Shows a Mixed Trend

Beyond food prices, core inflation also moderated substantially on an annual basis. The rate fell to 12.95 per cent in September from 22.11 per cent in the corresponding month of 2025.

Core inflation excludes volatile agricultural produce and energy prices, helping analysts assess underlying price movements across other parts of the consumer basket. Its annual decline suggests that broader inflationary pressures have eased considerably over the year.

Nevertheless, the monthly picture was less reassuring. Core inflation rose to 1.11 per cent in September from -0.06 per cent in August, indicating renewed short-term price pressure in some underlying components.

This divergence deserves close attention. While the annual figures point to a substantial slowdown, the monthly increase suggests that inflation is not easing uniformly across all sectors.

For manufacturers and other businesses, the outlook will also depend on the prices of energy, transport, imported inputs and financing. Unless these costs become more predictable, falling headline inflation may not immediately translate into lower production expenses or cheaper goods and services.

What the Figures Mean for Interest Rates

The September inflation reading could give the CBN additional grounds to consider further interest-rate reductions. Lower rates can, under appropriate conditions, reduce borrowing costs, encourage investment and support consumer spending.

However, the relationship between monetary policy and commercial lending rates is not automatic. Banks will continue to consider their funding costs, credit risks and liquidity positions when pricing loans.

Furthermore, cutting rates too quickly could create risks if liquidity expands faster than productive capacity or if exchange-rate pressures feed into domestic prices. Policymakers must therefore assess whether the slowdown represents a durable trend rather than a temporary improvement driven largely by food prices.

For now, the reduction of the MPR to 23.00 per cent provides a key reference point for assessing the direction of monetary policy. Subsequent inflation data will help determine whether the central bank has sufficient room to ease further.

Economic Relief Will Depend on Sustained Progress

The latest figures offer a more encouraging inflation picture, but the practical benefits will depend on how consistently the trend continues and how it affects household incomes and business costs.

For families, the central question is whether food and other essential goods become more affordable relative to their earnings. Meanwhile, businesses need more predictable input costs, improved access to financing and stable foreign-exchange conditions to plan investment and production.

Similarly, the government may benefit from a more predictable price environment when planning expenditure and assessing wage and social-support demands. Nevertheless, lower inflation alone does not resolve the wider challenges of poverty, weak purchasing power and the cost of essential services.

Ultimately, September’s decline to 14.63 per cent represents a significant moderation in annual inflation. Yet the rise in monthly core inflation and the still-high annual food inflation rate underline the need for caution. If subsequent data confirm that price pressures are easing sustainably, the CBN could gain greater flexibility to adjust monetary policy while monitoring the effects on liquidity, the exchange rate and inflation expectations.