Nigeria’s battle against inflation is entering a new phase, and experts say food prices are now the biggest concern. Analysts at Zrosk Equity Research have warned that rising costs of farm produce are increasingly driving inflation across the country, creating a challenge that monetary policy alone may not be able to solve. Their assessment follows the release of the National Bureau of Statistics (NBS) June Consumer Price Index (CPI) report, which showed that while headline inflation eased slightly, food prices continued to climb at a worrying pace.
According to the NBS, Nigeria’s headline inflation rate declined marginally to 15.91% in June from 15.93% in May, while month-on-month inflation slowed to 1.66% from 1.75%. Despite this improvement, food inflation accelerated significantly, with the monthly food inflation rate rising to 3.75% in June compared to 2.98% in May. Analysts say this sharp increase in food costs is masking the progress seen in other parts of the economy and remains a major threat to consumers already struggling with high living expenses.
Zrosk Equity Research revealed that farm produce prices surged by 4.42% month-on-month in June after easing to 0.86% in May, describing the increase as a genuine agricultural supply shock. The firm noted that farm produce accounts for about 95% of Nigeria’s food basket and more than a quarter of the overall Consumer Price Index basket. As a result, farm produce alone contributed roughly 71% of June’s monthly inflation figure, highlighting just how heavily food costs now influence overall price levels.
The analysts stressed that this new inflation trend is different from previous episodes that were largely driven by energy prices, exchange rate pressures, or consumer demand. They argued that the current challenge stems from domestic agricultural supply conditions, making it difficult for the Central Bank of Nigeria (CBN) to address through interest rate adjustments. According to the report, if food inflation remains elevated in the coming months, headline inflation could stay stubbornly high regardless of improvements in energy prices or exchange rate stability.
The growing dominance of food prices in Nigeria’s inflation outlook is also shaping expectations for future monetary policy. Standard Chartered, in its latest economic outlook, said it expects the CBN to cut interest rates by only 150 basis points in 2026, projecting that the Monetary Policy Rate will end the year at 25%. The bank also revised its average inflation forecast upward to 15.5%, reflecting concerns that persistent food price pressures could limit the scope for aggressive rate cuts. Analysts believe that improving agricultural production, strengthening food supply chains, and enhancing market distribution systems will be critical if Nigeria hopes to achieve lasting relief from inflation.
source: nairametrics
