Harvest season, stable naira set to pull inflation down to 21.34% in July

Nigeria’s inflation rate is projected to decline for the second month in a row in July, as analysts point to the start of the harvest season, stable exchange rates and lower logistics costs.

In its latest forecast, Financial Derivatives Company (FDC) projected headline inflation to ease to 21.34 percent in July from 22.22 percent in June, aided by base-year effects and slowing food prices.

Month-on-month inflation is expected to dip by 0.08 percentage points to 1.60 percent, annualised at 20.77 percent.

FDC’s market survey in July showed significant price drops in key food items. Tomatoes fell by 31.82 percent, yams 18.18 percent, onions 21.43 percent, peppers 11.11 percent, turkey 11.76 percent, palm oil 4.17 percent, beans 3.53 percent, and garri 3.03 percent.

The survey also found that 68.57 percent of items, including rice, wheat flour, semovita, eggs, Irish potatoes, basmati rice and vegetable oil, maintained stable prices. Import-dependent products such as titus fish, basmati rice and beverages were largely unchanged.

The naira held around N1,530 at both official and parallel market windows in July, supported by Central Bank interventions. Diesel prices dipped by 2 percent to N1,050 per litre, slightly reducing transport and logistics costs.

Year-on-year food inflation is projected to drop to 21.35 percent from 21.97 percent, while monthly food inflation is expected to ease to 2.68 percent from 3.25 percent.

Core inflation is forecast to decline to 22.41 percent from 22.76 percent, helped by currency stability and steady energy prices.

FDC, however, warned that insecurity in major food-producing regions, falling global oil prices, and expected seasonal demand for foreign exchange — particularly for overseas tuition and festive season stockpiling — could put renewed pressure on prices in the coming months.