Inflation eases in August to eight-month low

Latest reading: Consumer prices increased 20.1% on a year-on-year basis in August, following a 21.9% rise in the prior month. August’s reading marked the fifth consecutive decrease in inflation and an eight-month low. Relative to the previous month's data, there were milder price pressures for food (+18.7% vs +20.9% in July) and housing and energy (+19.0% vs +26.1% in July). In contrast, price pressures were higher for clothing and footwear in August (+18.5% vs +18.0% in July). Meanwhile, core consumer prices rose 20.1% on a year-on-year basis in August, following a 21.4% rise in the previous month. Lastly, consumer prices rose 0.74% in August in month-on-month terms, following a 1.99% rise in the previous month.

Outlook: Inflation is seen declining this year and further next year thanks to a high base of comparison and the lower weight of food in the consumer price basket after the statistical office changed its data methodology earlier in 2025. Moreover, lower local fuel costs and a softer currency depreciation will further cap price growth. Still, further interest rate cuts will prevent a sharper decline in inflation.

Panelist insight: On the outlook, economists at Oxford Economics commented: “We are cautiously optimistic that headline inflation has found a disinflationary footing, with CPI inflation recording its fifth consecutive slowdown in August. We think consumer prices will benefit from a decrease in local fuel prices as the Dangote Refinery ramps up production and supplies directly to retailers, while a more stable naira will help keep price pressures in check.”

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