Nigeria’s inflation is falling but the cost-of-living crisis is not

Nigeria’s inflation rate is falling, but the cost-of-living crisis is proving harder to defeat. Headline inflation declined to 15.43 percent in July 2026 from 15.91 percent in June and 24.94 percent a year earlier. Food inflation, which matters most to household budgets, accelerated sharply. It rose to 20.31 percent year-on-year in July from 17.52 percent in June, while monthly food inflation jumped from 3.75 percent to 5.56 percent.

Prices of staples, including rice, onions, tomatoes, pepper, garri, plantain, beef and eggs, increased. For households already struggling with diminished purchasing power, the improvement in the headline figure offers limited relief.

This does not mean Nigeria’s disinflation has failed. It shows that improving macroeconomic conditions have yet to translate consistently into cheaper essentials and stronger household purchasing power. Monthly headline inflation slowed to 1.57 percent in July from 1.66 percent in June, while core inflation fell to 14.97 percent year-on-year and 0.15 percent month-on-month. Greater exchange-rate stability and the fading effects of fuel-subsidy removal and foreign-exchange reforms have reduced some of the shocks that previously pushed prices higher. Average food inflation over the 12 months to July also fell from 30.85 percent a year earlier to 16.06 percent.

But lower inflation should not be confused with lower prices. Inflation measures the rate at which prices change, not whether households can afford what they need. After several years of high inflation, Nigerians are still living with a much higher price level. A family whose income has failed to keep pace with the cumulative increase in food, transport, housing and energy costs does not recover its purchasing power simply because inflation falls. The policy question is therefore shifting from whether Nigeria can slow price increases to whether it can make production cheaper, distribution more efficient and incomes more resilient.

As exchange-rate pressures ease, supply constraints are becoming more important, particularly in food. Monetary policy remains essential for anchoring expectations and maintaining stability, but higher interest rates cannot produce more tomatoes, reduce post-harvest losses or repair rural roads. The Central Bank of Nigeria should therefore remain focused on sustained price stability while fiscal and structural policies tackle the constraints that make domestic production and distribution expensive.

Agricultural policy needs to move from activity to outcomes. Nigeria has no shortage of programmes for farmers, but too many interventions are judged by funds released, inputs distributed or hectares covered rather than by whether food becomes more abundant and affordable. Federal and state governments should establish quarterly indicators for major staples covering production, farm-to-market transport costs, post-harvest losses and wholesale-retail price gaps. The results should be published, with significant deviations from targets requiring explanations from responsible authorities. Agricultural policy should ultimately be judged by what happens in markets, not by the number of programmes announced.

Infrastructure spending should face the same test. Roads linking major food-producing regions to urban markets directly affect consumer prices. The government should identify priority food corridors and set measurable targets for travel times, freight costs and road reliability. A road project should be assessed not simply by kilometres constructed, but by whether it reduces the cost and time of moving food from farms to consumers.

Storage is equally important. Farmers without adequate storage are often forced to sell when harvests flood the market, while consumers later pay more when supplies tighten. The government should facilitate private investment in warehouses, cold-chain systems and processing facilities around major production centres, with support tied to utilisation and reductions in post-harvest losses. Energy policy must be part of the same strategy. Reliable power for agricultural and processing clusters would reduce operating costs and limit the need to pass expensive energy costs through to consumers.

States have an equally important responsibility. Rather than replicating broad federal agricultural programmes, they should identify areas of genuine productive advantage and build the infrastructure, markets and regulatory systems needed to exploit them. Nigeria does not need 36 versions of the same agricultural strategy. It needs states that specialise, compete on productivity and publish measurable results. Decentralisation will be valuable only if it produces more food and lower distribution costs.

The Central Bank must, meanwhile, resist treating a lower headline inflation rate as an automatic invitation to loosen monetary policy rapidly. Moderating inflation may eventually create room for lower interest rates, but the recent acceleration in food prices shows that pressures remain uneven. Monetary decisions should be based on sustained trends, inflation expectations, exchange-rate conditions and broader economic indicators. Monetary policy can create conditions for stability; it cannot substitute for reforms that expand supply.

The government should also communicate the figures more precisely. Falling inflation should not be presented as though the cost of living has fallen. Restoring purchasing power requires not only lower inflation but also stronger employment, productivity and household incomes. Businesses must be able to invest, expand and hire without unnecessary regulatory, infrastructure and financing costs, while workers need an economy capable of generating better-paying productive jobs.

Nigeria has made meaningful progress in stabilising its inflationary environment, but the acceleration in monthly food inflation is a warning that the next phase will be harder. The objective should no longer be simply to make the inflation chart look better but to ensure that more efficient production, cheaper logistics, reliable energy and rising productivity translate into improved household welfare. The real test of disinflation is whether a Nigerian household can enter a market with the same income and afford more than it could before. Nigeria may be winning the inflation battle, but the real victory will come only when households can feel it in the market.