Inflation in Nigeria fell to around 15% in January 2026, marking a tenth consecutive month of decline and its lowest level since the end of 2020. This lull, driven in particular by falling food prices, offers a window of cautious optimism for Africa’s largest economy.

A Gradual Landing After the 2025 Peak

According to the National Bureau of Statistics (NBS), annual inflation fell to 15.1% in January, compared to 15.15% in December 2025, confirming the disinflationary trend that began ten months ago. Year-on-year, this represents a dramatic decline compared to the levels exceeding 27% observed at the beginning of 2025 before the change in methodology.

This decline comes as authorities have revised their calculation method to better reflect the actual structure of consumption, leading to a series of revisions to the 2025 inflation rates. Despite this technical change, the underlying trend remains clear: price increases are gradually losing momentum after months of pressure linked to the depreciation of the naira, rising fuel costs, and shocks to food supply.

Price dynamics: food, heartland, and regions

The latest figures show a particularly marked easing in food prices, the most sensitive component for households. The food inflation rate fell to around 8.9% in January, compared to nearly 30% a year earlier, thanks to lower prices for products such as oils, certain cereals, tubers, and vegetables.

Core inflation (excluding food and energy) remains higher, at around 17.7%, but it too is on a downward trajectory and has reached its lowest level since the end of 2022. Geographically, data published by the NBS suggest disinflation in both urban and rural areas, although major cities continue to show price levels slightly above the national average.

Drivers of disinflation: exchange rate, fuel, and reforms

Several factors explain this gradual decline in inflation in Nigeria. First, the relative appreciation of the naira and improved foreign exchange liquidity are helping to reduce the cost of imports, particularly for consumer goods and certain agricultural inputs.

Second, the strengthening of domestic refining capacity is beginning to limit the pass-through of international fuel price increases to pump prices, thus mitigating shocks to transport and logistics costs. Finally, the monetary tightening measures taken by the Central Bank of Nigeria (CBN), combined with structural reforms, have helped to gradually anchor inflation expectations, even though the overall price level remains high.

Towards a cautious monetary easing?

The CBN’s monetary policy meeting, expected in the coming days, will take place against this backdrop of gradual disinflation. With inflation at 15%, some analysts believe the Central Bank now has room to begin slightly easing its policy after several quarters of aggressive tightening.

Others, however, argue for maintaining a restrictive stance, or even further tightening, to consolidate the downward trajectory of prices in a still fragile environment marked by risks to fuel, exchange rates, and food security. The final decision should therefore reflect a delicate balance between supporting economic activity and combating inflation in a country where growth remains insufficient to absorb population growth.

Impact on Purchasing Power and the Social Climate

For households, the decline in inflation translates into a slowdown in price increases rather than a genuine decrease in the cost of living. In other words, prices continue to rise, but less rapidly than before, which is far from compensating for the loss of purchasing power accumulated during the inflationary peak of 2023–2025.

The sharp decline in food inflation is nonetheless a welcome relief for the poorest households, whose budgets are largely consumed by food. If this trend continues over several months, it could help to ease some social tensions, particularly in urban areas where price increases have fueled protest movements.

Opportunities and Challenges for Businesses and Investors

For businesses operating in Nigeria, a more stable inflationary environment improves cost visibility and facilitates investment planning. Moderating prices for imported inputs, combined with lower naira volatility, can help restore margins, particularly in industry, agribusiness, and distribution.

From an investor perspective, continued disinflation, if accompanied by clear monetary policy and credible reforms, could enhance the attractiveness of Nigerian assets, both in the bond and equity markets. However, the sustainability of this trajectory will depend on the authorities’ ability to maintain macroeconomic discipline, contain energy shocks, and continue progress in security, governance, and infrastructure.

What are the prospects for the remainder of 2026?

Projections from several institutions and analysts anticipate a continued deceleration of inflation throughout 2026, with the rate potentially falling to around 14% by the end of the first quarter if current trends continue. However, risks remain: renewed pressure on the naira, an unexpected rise in international oil prices, or climate disruptions could quickly reignite price pressures.

To consolidate this improvement, Nigeria will therefore need to intensify its structural reforms, support local production, secure supply chains, and continue efforts to stabilize the foreign exchange market. The current inflation trajectory is not merely a macroeconomic indicator; it is a key test of the country’s ability to return to inclusive growth that protects purchasing power and attracts investment.