Relief for households as food prices drop, inflation eases in January

FOOD inflation, the biggest driver of household spending, dropped sharply in January 2026, providing the strongest relief to Nigerian consumers and setting the tone for the overall easing in prices. On a year-on-year basis, food inflation fell to 8.89 percent, a steep decline of 20.73 percentage points from the 29.63 percent recorded in January 2025.

On a month-on-month basis, food prices declined further to –6.02 percent, compared with –0.36 percent in December 2025, representing a drop of 5.66 percentage points. The National Bureau of Statistics (NBS) attributed this to lower average prices of key staples, including water yam, eggs, green peas, groundnut oil, soya beans, palm oil, maize grains, guinea corn, beans, beef, melon (egusi), cassava tubers and cowpeas.

This implies that prices of these food items rose at a much slower pace in January 2026 compared with December 2025 or January 2025.

Over the 12 months ending January 2026, the average food inflation rate stood at 20.29 percent, significantly lower than the 38.47 percent recorded in January 2025, indicating sustained easing in food price pressures.

Following the sharp decline in food prices, Nigeria’s headline inflation rate also moderated. The Consumer Price Index (CPI) showed that headline inflation eased slightly to 15.10 percent in January 2026 from 15.15 percent in December 2025, a marginal 0.05 percentage-point drop. Compared with the same period last year, inflation fell by 12.51 percentage points from 27.61 percent in January 2025.

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On a month-on-month basis, overall inflation slipped into negative territory at –2.88 percent in January, compared with 0.54 percent in December, a swing of 3.42 percentage points. According to the NBS, this means the general price level declined during the month, with average prices of goods and services lower than in December. Nigeria’s headline inflation rate moderated to 15.1 percent in January 2026, down slightly from 15.15 percent recorded in December 2025.

Despite the recent easing, longer-term inflation remains elevated. The average CPI change for the 12 months ending January 2026 was 21.97 percent, which is 4.37 percentage points higher than the 17.59 percent recorded in January 2025, showing that underlying price pressures over the past year are still significant.

Core inflation, which excludes volatile food and energy prices, also declined. It stood at 17.72 percent year on year in January 2026, down by 7.55 percentage points from 25.27 percent in January 2025. On a month-on-month basis, core inflation fell to –1.69 percent from 0.58 percent in December, reflecting slower price increases in non-food items. The 12-month average core inflation rate dropped to 22.84 percent, compared with 27.24 percent a year earlier.

Urban and rural areas followed the same easing trend. In urban centres, inflation stood at 15.36 percent year on year in January 2026, down from 29.45 percent in January 2025, while month-on-month inflation fell to –2.72 percent from 0.99 percent. However, the 12-month average urban inflation rate remained high at 22.30 percent, up from 18.88 percent a year earlier.

In rural areas, year-on-year inflation eased to 14.44 percent from 25.04 percent a year earlier. Month-on-month rural inflation declined further to –3.29 percent from –0.55 percent in December, showing deeper price declines outside the cities. The 12-month average rural inflation rate fell to 21.03 percent, compared with 30.79 percent in January 2025.

Analysts had expected January’s inflation to remain flat or edge slightly higher, with projections in the 15.15%–16.25% range, reflecting a balance between post-holiday easing in food prices and persistent pressures from fuel, seasonal supply adjustments and import-linked goods. The lower-than-expected outcome now provides an early signal for first-quarter monetary policy decisions as liquidity conditions and supply-side factors continue to shape Nigeria’s inflation trajectory.

Chief Executive Officer of Financial Derivatives, Mr Bismark Rewane, said that fallling inflation was fuelled by a firm disinflationary stance by the Central Bank of Nigeria (CBN), improvements in domestic refining capacity that could reduce volatility in fuel prices, stronger manufacturing output, rising productivity, and reforms aimed at lowering logistics and supply-chain costs.