Analysts see May inflation easing to 15.02% as food prices stabilise

Nigeria’s headline inflation rate is expected to slow further in May 2026 as stable food prices and easing energy shock effects help moderate price pressures, according to projections by the Financial Markets Dealers Association (FMDA).

The dealers’ body forecasts headline inflation at 15.02 percent year-on-year in May, down from 15.89 percent recorded in April, extending the disinflation trend that has emerged since the rebasing of the Consumer Price Index (CPI).

FMDA also expects monthly inflation to moderate significantly to 0.95 percent in May from 2.13 percent in April, reflecting stable domestic food prices and the fading pass-through effects of the Middle East-induced energy shock that intensified earlier in the year.

The forecast comes ahead of the National Bureau of Statistics’ (NBS) release of May inflation data and offers fresh evidence that the aggressive monetary tightening by the Central Bank of Nigeria and improving food supply conditions may be gradually easing inflationary pressures.

According to FMDA, domestic food prices were largely stable during the month. Data from the World Bank food market survey showed that the food price index remained unchanged at 3.92, despite mixed movements across key staples. While prices of fish, beef, yam and eggs increased during the month, declines in beans, onions, and rice helped offset the gains and moderate overall food inflation.

Fish prices rose by 2.15 percent month-on-month in May, beef increased by 1.25 percent, while yam prices gained 0.99 percent. In contrast, onion prices fell 2.7 percent, beans declined 0.7 percent, and rice dropped 0.22 percent.

However, FMDA warned that inflationary pressures have not completely disappeared.

The association noted that exchange-rate dynamics remained mildly inflationary during the month as the naira depreciated by 0.64 percent to an average of N1,370 per dollar in May from N1,361.22 per dollar in April. The weaker currency is expected to raise the cost of imported food items and manufacturing inputs.

Energy costs also remained elevated. Although official fuel pricing data for May had not been released at the time of the report, market prices suggested that petrol traded largely between N1,400 and N1,500 per litre, sustaining pressure on transportation and production costs across the economy.

“Stable food prices may help contain inflationary pressures in May. However, exchange rate depreciation and elevated fuel costs are expected to keep underlying inflation pressures firm,” FMDA said.

Global developments present another source of concern. According to FMDA, global food prices remained broadly elevated despite the Food and Agriculture Organisation’s Food Price Index declining marginally by 0.2 percent in May. Rising energy and fertiliser costs, as well as uncertainty surrounding the Strait of Hormuz, continue to pose upside risks to food prices globally.

The report showed that wheat prices increased to $303 per metric tonne in May from $282 in April, while Thailand’s benchmark rice prices jumped to $440 per metric tonne from $403, signalling continued imported inflation risks for Nigeria.

In a separate report, analysts at Meristem Securities share the view that inflationary pressures may ease on a month-on-month basis but remain concerned about persistent structural risks.

In its May inflation expectation report, Meristem projected headline inflation at 15.95 percent year-on-year, slightly higher than FMDA’s estimate, citing renewed pressure from food inflation, elevated fuel costs, and exchange-rate depreciation.

The investment firm’s commodity tracker showed increases in key staples such as maize, sorghum, paddy rice, and soya beans during May, reflecting pre-harvest supply constraints and sustained pressure in food markets.

Meristem also noted that the naira weakened to an average of N1,370 per dollar during the month, while multiple petrol price increases continued to raise transportation and distribution costs, reinforcing inflationary pressures across food and core components.

Nevertheless, the firm expects inflationary pressures to moderate slightly monthly as food price momentum eases and the pass-through effect of earlier oil price shocks begins to weaken.