Disinflation Regains a Foothold in June 2026, But Food Reasserts Itself: Implications for Policy and Outlook
After three months of small increases, Nigeria’s inflation rate finally dipped in June 2026. Headline inflation eased marginally to 15.91% year-on-year from 15.93% in May. It is just a two-basis-point move, but it matters because it breaks the upward trend seen since March. The relief did not come from food. It came from energy and other non-food items getting cheaper, while food prices continued to climb. With the Central Bank’s Monetary Policy Committee meeting on July 20-21, this mixed picture will shape what happens next to interest rates and household budgets.
The headline drop was driven almost entirely by core inflation, which excludes food and energy, falling sharply to 15.92% from 16.82%. That was enough to offset the fact that food inflation accelerated for the fifth straight month to 17.52% from 16.96%. On a monthly basis the pattern is even clearer. Overall prices rose 1.66% in June, down from 1.75% in May. Core prices also slowed to 1.66% from 1.94%. But food prices jumped 3.75% in the month, up from 2.98% in May, the fastest monthly food increase in a while. Compared to a year ago, the improvement is much larger. Headline inflation has fallen from 25.29% in June 2025 to 15.91% now. Food has dropped from 25.41% to 17.52%, and core from 25.41% to 15.92%. So Nigeria is still in a disinflation cycle year-on-year, even though month-to-month progress has been slow. This happened against a backdrop of some stability. Foreign reserves rose to $51.29 billion, a 13-year high. The naira gained over 4% this year and the gap between official and parallel rates is now below 3%. Tax revenue is up 49% to N15.8 trillion. The stock market is still up over 55% this year despite a N13 trillion sell-off in June. Globally, oil prices also eased in June to around $84 per barrel after a brief US-Iran truce, which helped lower fuel costs locally.
Food is where the pain remains. After hitting a low of 8.89% in January, food inflation has risen every month and now stands at 17.52%. The monthly jump of 3.75% shows the pressure is building again just before the main harvest. Transport and logistics costs are up because petrol prices rose 51.8% between February and May, from N1,051 to N1,596 per litre. Cooking gas for a 5kg cylinder rose 28% in three months and bus fares went up about 20%. Moving food from farms to markets is simply more expensive. Insecurity along key farming routes is making it worse. Farm produce inflation hit 4.42% month-on-month. In states like Kogi, food inflation is 53.02%, in Niger 43.83%, and in Benue 40.83%. That Benue is high is telling, because it is a major food-producing state. The problem is not just output, but getting food out safely and cheaply. Across the country, 25 states still have food inflation above 30%. There were a few exceptions in June. Monthly food prices actually fell in Borno by 3.54%, Benue by 2.36%, and Bayelsa by 1.34%, likely due to aid and early harvests. But in Katsina, Kebbi and Niger, monthly food prices jumped by 16.8%, 9.8% and 9%. The big question for the next two months is whether the July-August harvest will bring enough supply to break this cycle.
This is where the good news is. Core inflation, which captures rent, transport, health, education and other services, fell by 90 basis points to 15.92%. Monthly core inflation also slowed to 1.66%. The main reason was energy. After the brief ceasefire in the Middle East in June, global oil prices fell and that passed through to petrol and utility costs. Transport inflation dropped to 15.62% from 17.11% year-on-year. Prices for phones and communication, and for furniture, also eased. Not everything cooled. Housing, water and electricity costs kept rising to 11.19%, and health costs edged up to 18.88%. These tend to adjust with a lag. But overall, the fact that core inflation is falling suggests the CBN’s high interest rates are still working on the parts of the economy they can control. The bank watches this number closely because it shows whether demand is slowing.
Looking at the 13 categories the NBS tracks, only four saw prices accelerate in June: food and non-alcoholic drinks, housing and energy, health, and education. Together these make up about 60.7% of household spending. That sounds worrying, but the reason is simple: food alone is 40% of the basket. If you remove food, the other categories pushing inflation up are small. Most other items, including transport, communication and furnishings, actually slowed down. So inflation has become narrower. It is now largely a food problem, not a broad problem across everything Nigerians buy. On a monthly basis, the same four categories accelerated: food, transport, education and personal care. Again, food dominates the weight.
The gap between cities and rural areas also widened. Rural inflation slowed to 15.48% year-on-year and monthly rural inflation dropped sharply to 0.52%. That suggests some early harvest effects and local supply improvements in villages. Urban inflation, however, ticked up to 16.08%, and monthly urban inflation rose to 2.13%. Cities feel price pressures more because they depend heavily on services, rent, and transport. Rural areas are more exposed to food supply shocks, but in June they got a bit of relief while cities did not.
Inflation is now moving in opposite directions depending on where you live. The highest annual rates were in Niger at 42.23%, Kogi at 41.59%, and Abuja at 39.91%. The lowest were in Imo at 19.47%, Ebonyi at 20.79%, and Katsina at 21.87%. Monthly changes were even starker. Prices jumped 11.65% in Niger, 8.13% in Katsina and 7.52% in Kwara in just one month. But they fell outright in Bayelsa by 6.48%, Benue by 5.58%, and Cross River by 5.12%. For food specifically, Kogi, Niger and Benue had the worst annual rates, all above 40%. The lowest food inflation was in Katsina, Rivers and Imo. Monthly, Katsina, Kebbi and Niger saw the biggest food price increases, while Borno, Benue and Bayelsa saw declines. For an average household, this means the mild national slowdown offers little comfort. If you live in Niger, Kogi or Abuja, your cost of living is rising almost three times faster than someone in Imo or Ebonyi.
Financial markets took the data in stride. 91-day Treasury bill yields stayed at 16.30%, while longer 364-day yields eased slightly as investors bet on inflation continuing to drift down. On the stock market, the NGX All-Share Index dipped 0.21% on the day of the release, but remains up over 55% for the year. The market had already priced in the June correction after FTSE Russell delayed Nigeria’s market upgrade.
June’s two-basis-point decline is small, but it signals that the stall in inflation between March and May may be ending. EA-Proshare analysts expect headline inflation to stay in the 15% to 16% range in July. What happens next depends on a few key things. First, whether the naira stays stable and imports don’t get more expensive. Second, what happens with Dangote Refinery’s decision to sell fuel in dollars domestically. Third, whether the Strait of Hormuz stays open, because another oil price spike would undo June’s energy relief. Fourth, and most important for households, whether the July-August harvest brings real food supply to markets. Finally, government spending ahead of elections could also add pressure. The CBN meets next week. In May, Governor Cardoso called the earlier inflation rise “transitory” and held rates at 26.50%. With core inflation now cooling but food still rising, the most likely outcome is another hold. The bank can influence interest rates and the naira, but it cannot fix farm insecurity or lower transport costs directly. For now, disinflation has a foothold. But until food prices turn around, most Nigerians will not feel it.
