Nigeria’s inflation cools to 22.97% in May as food risks mount

Nigeria’s headline inflation has decelerated for the second month in May, offering a sliver of relief for an economy battered by soaring prices. The slowdown is largely technical, driven by favorable base effects and a marginal but firming gain in the naira that has helped cap the cost of imports.

Headline inflation moderated to 22.97% year-on-year in May, down from 23.61% recorded in April, according to data released by the National Bureau of Statistics (NBS) on Thursday. On paper, the decrease is a relief but the realities still remain harsh on the populace. Food inflation marginally declined to 21.14% in May compared to the previous month.

The naira’s relative stability, appreciating roughly 1% against the dollar in the official market during the month, has been a key factor in steadying prices for imported goods and raw materials. This has translated into some price relief for consumers, with spot-checks in major urban markets like Lagos and Abuja showing modest declines in select food items.

“However, the outlook remains mixed. Despite the expected tapering, food inflation may continue to face upward pressure due to structural challenges,” Samuel Oyekanmi, an analyst at Norrenberger said.

“Heightened insecurity and early onset of flooding in key food-producing regions, particularly the Middle Belt, have already begun to disrupt supply chains.”

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Analysts warn that structural weaknesses in the country’s agricultural sector are likely to keep food inflation stubbornly high, preventing a more meaningful drop in the headline rate.

The core of the problem lies in Nigeria’s food-producing regions. Escalating insecurity and the premature onset of seasonal flooding in the Middle Belt—the nation’s food basket—are already disrupting supply chains and strangling output. These localised shocks pose a significant upside risk to the national forecast.

Data from April, for instance, showed food inflation had already surged past 50% in Benue State, a key agricultural hub, signaling a worrying trend that could feed into the national average in the coming months, Oyekanmi said.

For policymakers at the Central Bank of Nigeria, the May data will provide limited comfort. While any slowdown in price growth is a positive sign, the persistent threat from food inflation will likely necessitate keeping monetary policy tight to anchor inflation expectations and defend the recent gains in the naira.