Nigeria's Inflation Eases to 15.10% in January as Food and Energy Costs Decline
Nigeria's headline inflation rate declined to 15.10% in January 2026 from 15.15% in December 2025, marking a modest deceleration driven by lower food, fuel, and cooking gas prices, according to the National Bureau of Statistics.
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Nigeria's headline inflation rate declined to 15.10 percent in January 2026 from 15.15 percent in December 2025, marking a five-basis-point deceleration as food and energy costs eased, the National Bureau of Statistics (NBS) reported. The marginal decline represents the first month-on-month reduction in consumer price pressures since the Central Bank of Nigeria (CBN) began its aggressive monetary tightening cycle in 2024.
The January reading, while showing limited improvement, signals potential stabilisation in Africa's largest economy after inflation surged above 34 percent in mid-2024 before moderating through the final quarter of 2025. The year-on-year rate of 15.10 percent remains significantly elevated compared to the CBN's medium-term target range of 6-9 percent, though it reflects substantial progress from peak levels recorded during the naira's devaluation period.
According to the NBS data, the inflation deceleration was primarily driven by declining prices in the food basket, which carries significant weight in Nigeria's consumer price index given household spending patterns. Energy costs, particularly cooking gas and fuel, contributed to the downward pressure on headline inflation as supply conditions improved across domestic markets.
Energy Price Relief Supports Household Budgets
Liquefied petroleum gas (LPG) prices moved toward N1,000 per kilogram in February 2026, down from peaks above N1,400 per kilogram in late 2024, as increased imports stabilised nationwide supply. The cooking gas price decline offers material relief to Nigerian households, which have faced compounding cost pressures from currency depreciation and subsidy removals implemented under President Bola Tinubu's economic reforms.
The stabilisation in LPG supply follows expanded import capacity and improved foreign exchange availability for energy importers, addressing bottlenecks that constrained domestic distribution networks throughout 2024 and early 2025. Lower cooking gas costs reduce household energy expenditure, particularly for urban middle-income families who shifted from kerosene to LPG during previous supply disruptions.
Fuel prices similarly moderated in January, reflecting global crude oil price dynamics and naira exchange rate stability. The CBN has maintained the naira within a N1,450-N1,550 per dollar range since November 2025, following interventions that supported currency stability after earlier volatility. Stable fuel costs limit pass-through inflation effects across transportation and logistics sectors, which amplify price pressures in Nigeria's import-dependent economy.
Monetary Policy Implications and Forward Guidance
The January inflation print provides the CBN's Monetary Policy Committee with additional data ahead of its next scheduled meeting in March 2026. The central bank has maintained its benchmark interest rate at 27.50 percent since September 2025, pausing after 850 basis points of cumulative tightening delivered between February 2024 and July 2025. CBN Governor Olayemi Cardoso has emphasised data dependency in forward guidance, indicating policy adjustments will respond to sustained inflation trajectory shifts.
Core inflation, which excludes volatile food and energy components, will be closely monitored by policymakers to assess underlying price pressures. The headline rate's modest decline may not immediately trigger policy easing, as the CBN seeks confirmation that disinflation is entrenched rather than temporary. Money supply growth and credit expansion metrics will factor into MPC deliberations, alongside fiscal policy coordination with the Federal Ministry of Finance.
Food inflation remains a critical variable, given Nigeria's agricultural sector challenges including insecurity in farming regions, inadequate infrastructure, and seasonal production patterns. The January data suggests some easing in food price pressures, though structural supply constraints continue to limit downside potential. Government initiatives to boost agricultural productivity and improve distribution networks will influence medium-term inflation outcomes.
Economic Growth and Investment Climate
The inflation moderation occurs as Nigeria targets 3.5-4.0 percent GDP growth for 2026, according to the Federal Ministry of Budget and Economic Planning's projections. Lower inflation supports real income growth and consumer spending power, potentially strengthening domestic demand after two years of purchasing power erosion. However, elevated interest rates continue to constrain private sector credit growth and business investment, creating tension between price stability and growth objectives.
Foreign portfolio investors are monitoring Nigeria's inflation trajectory alongside fiscal consolidation efforts and oil production levels. The country aims to achieve 2.0 million barrels per day oil output in 2026, up from approximately 1.5 million bpd in 2025, which would strengthen foreign exchange earnings and support macroeconomic stability. Sustained disinflation would enhance Nigeria's attractiveness for fixed-income investments, particularly as real yields on Nigerian treasury instruments remain among the highest globally.
The NBS will release detailed inflation breakdowns including urban-rural differentials and state-level variations in its comprehensive January 2026 report. Regional inflation disparities reflect Nigeria's diverse economic conditions, with northern states typically experiencing higher food inflation due to security challenges affecting agricultural production. February 2026 inflation data, scheduled for release in mid-March, will indicate whether January's deceleration marks the beginning of a sustained downward trend or represents temporary relief from seasonal factors.