CBN Faces Mixed Inflation Signals Ahead MPC Meeting

Headline Inflation Falls To 15.91% As Monthly Food Index Rises

The Central Bank of Nigeria (CBN) heads into its next Monetary Policy Committee (MPC) meeting with mixed inflation signals after the National Bureau of Statistics (NBS) reported a marginal decline in headline inflation, even as food prices continued to rise at a faster pace.

According to the Consumer Price Index (CPI) report for June 2026 released by the NBS on Wednesday, headline inflation eased slightly to 15.91 per cent from 15.93 per cent recorded in May, marking the first moderation after three consecutive monthly increases.

The development comes ahead of the MPC meeting scheduled to be held on July 20 and 21, where members are expected to assess the inflation outlook and determine the appropriate monetary policy stance amid improving macroeconomic indicators and persistent food price pressures.

The NBS said, “In June 2026, the headline inflation rate was 15.91 per cent, down from 15.93 per cent in May 2026 and stood at 25.29 per cent in the same month of the preceding year.”

On a month-on-month basis, headline inflation slowed to 1.66 per cent in June from 1.75 per cent in May, indicating a slower pace in the overall increase in consumer prices.

Despite the moderation in headline inflation, food inflation presented a different picture.

The report showed that food inflation rose 3.75 per cent month-on-month, compared to 2.98 per cent in May, reflecting renewed pressure on the prices of essential food items.

The NBS attributed the increase to higher prices of commodities, including fresh pepper, tomatoes, crayfish, beef, garri, yam flour, water yam, bananas, cassava flour, cowpea and Irish potatoes.

On a year-on-year basis, food inflation stood at 17.52 per cent, lower than the 25.41 per cent recorded in June 2025, largely due to the statistical base effect.

The bureau also reported that the Consumer Price Index increased to 143.0 in June from 140.7 in May, representing a 2.3-point increase over the previous month.

Core inflation, which excludes the prices of volatile agricultural produce and energy, eased to 15.92 per cent year-on-year, while month-on-month core inflation declined to 1.66 per cent from 1.94 per cent in May.

An analysis of the inflation basket showed that food and non-alcoholic beverages remained the largest contributors to headline inflation, accounting for 6.37 percentage points.

Restaurants and accommodation services contributed 2.06 percentage points, transport accounted for 1.70 percentage points, while housing, water, electricity, gas and other fuels added 1.34 percentage points. Education services contributed 0.99 percentage points, while health accounted for 0.96 percentage points.

The report also showed that average headline inflation for the 12 months ending June 2026 declined to 17.63 per cent from 29.82 per cent recorded in the corresponding period of 2025.

Similarly, the average annual food inflation rate fell to 16.42 per cent from 31.93 per cent a year earlier.

Urban inflation stood at 16.08 per cent year-on-year, while rural inflation was 15.48 per cent.

On a month-on-month basis, urban inflation increased to 2.13 per cent from 1.99 per cent, while rural inflation slowed to 0.52 per cent from 1.17 per cent in May.

Across the states, Niger State recorded the highest annual all-items inflation rate at 42.23 per cent, followed by Kogi at 41.59 per cent and the Federal Capital Territory at 39.91 per cent.

Imo State recorded the lowest annual inflation rate at 19.47 per cent, followed by Ebonyi at 20.79 per cent and Katsina at 21.87 per cent.

For food inflation, Kogi State posted the highest year-on-year rate at 53.02 per cent, followed by Niger State at 43.83 per cent and Benue State at 40.83 per cent.

Katsina recorded the lowest food inflation rate at 19.15 per cent, while Rivers and Imo posted 23.81 per cent and 24.60 per cent, respectively.

The latest inflation figures are expected to feature prominently at the MPC meeting, where policymakers will weigh the modest easing in headline inflation against the resurgence in monthly food inflation, as well as other macroeconomic indicators including exchange rate stability, external reserves and economic growth.

While the slight moderation in headline inflation may strengthen calls for monetary easing, the continued increase in food prices suggests that underlying inflationary pressures remain, potentially supporting the CBN’s cautious approach to interest rate decisions.

The President of the Capital Market Academics of Nigeria, Prof Uche Uwaleke, said that the CBN has consistently highlighted improvements in policy coordination, banking sector resilience, external reserve accumulation, and monetary policy transmission.

He said. “A premature shift in policy direction, particularly via further tightening, could undermine the confidence it has sought to build over the past year.

“Against this backdrop, my base-case expectation is that the MPC will once again retain the Monetary Policy Rate at 26.5 percent, maintain the current asymmetric corridor around the MPR, and leave the Cash Reserve Requirement and other policy parameters unchanged.

“The accompanying communique is likely to acknowledge the slight increase in inflation but reiterate that the rise is being closely monitored and that the Committee remains prepared to act should inflationary pressures become more persistent or should exchange rate stability come under renewed pressure.

“Overall, the July meeting is likely to reinforce the message that the CBN remains firmly committed to bringing inflation down but is equally mindful of the need to avoid unnecessary policy volatility.

“Unless there is a significant deterioration in inflation, exchange rate conditions, or inflation expectations, a ‘hold and monitor’ approach appears to be the most probable outcome.”