Inflation Report 2026: Why Food Prices Are Falling Across Nigeria Despite Forex Fluctuations

Sanusi2 weeks ago

0 7 1 minute read

For the first time in over three years, Nigerians are starting the new year with a sense of relief at the grocery stores. According to the latest data from the National Bureau of Statistics (NBS) and the Central Bank of Nigeria (CBN), headline inflation has taken a dramatic dive, closing 2025 at 14.45%—a significant drop from the 34% levels seen in previous years.

But the real story is in the kitchen: Food inflation has hit a 5-year low.

The Numbers Behind the Relief

The transition into January 2026 has seen food inflation drop to approximately 11.08%. This cooling effect is being felt across major staples like rice, beans, maize, and tubers.

Analysts point to three main reasons for this downward trend:

The Harvest Effect: A surprisingly strong harvest season at the end of 2025 has flooded the markets with local produce, naturally driving down prices.
Improved Logistics: Reductions in the cost of Premium Motor Spirit (PMS) and better security on major hauls have lowered the cost of transporting food from the North to the Southern markets.
Currency Stability: With the Naira holding steady around ₦1,450/$1, the “imported inflation” that usually drives up the cost of fertilizers and processed foods has been neutralized.

Purchasing Power is Growing

As inflation eases, the purchasing power of the average Nigerian household is finally on the upswing.

“I can now buy a bag of local rice for significantly less than I did this time last year,” says Madam Chidi, a wholesaler in Lagos. “The market is moving again because people can actually afford to eat.”

What This Means for the Economy

The CBN forecasts that if this trend continues, inflation could reach a single-digit target by the end of 2026. This stability is expected to:

Encourage more consumer spending.
Allow the government to focus on infrastructure instead of emergency food interventions.
Provide a stable environment for Small and Medium Enterprises (SMEs) to plan their budgets.

Risks to Watch Out For

While the outlook is positive, experts warn that we must remain cautious. Potential risks include “pre-election spending” as political activities pick up, and the ever-present threat of climate change on future farming seasons.