Nigeria Inflation Slows for Fourth Month, Opening Door to Rate Cuts
TLDR
- Nigeria’s inflation slowed for a fourth straight month in July, reinforcing expectations that the central bank may soon begin lowering borrowing costs
- Consumer prices rose 21.9% year-on-year, down from 22.2% in June, the National Bureau of Statistics said
- The moderation was supported by naira stability and lower gasoline costs. Still, food inflation accelerated to 22.7% from 22% in June
Nigeria’s inflation slowed for a fourth straight month in July, reinforcing expectations that the central bank may soon begin lowering borrowing costs from a record high.
Consumer prices rose 21.9% year-on-year, down from 22.2% in June, the National Bureau of Statistics said. The reading was slightly above the Bloomberg survey median estimate of 21.8%. On a monthly basis, inflation accelerated to 1.99% from 1.7% the previous month.
The moderation was supported by naira stability and lower gasoline costs. Still, food inflation accelerated to 22.7% from 22% in June, while core inflation slowed to 21.3% from 22.8%.
The Central Bank of Nigeria has kept its key rate at 27.5% for three straight meetings, adopting a cautious stance as it monitors price dynamics. Analysts say continued disinflation could pave the way for the first rate cut as early as September.
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Key Takeaways
Nigeria’s easing inflation comes as the government pushes reforms to stabilise the economy after years of currency volatility and subsidy removal. Stable exchange rates and improved fuel supply, including distribution from the Dangote refinery, are expected to further ease price pressures. However, food inflation remains sticky, underlining structural challenges in agriculture and logistics. The harvest season may bring temporary relief, but longer-term risks persist from global commodity price swings and domestic supply bottlenecks. For the central bank, the data strengthens the case for easing record-high interest rates to support growth. Markets will watch whether disinflation sustains through Q3, as a September rate cut could signal a shift toward a more growth-supportive monetary stance.
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