Dear subscriber,
As widely expected, today’s inflation data from the NBS showed a decline, with the price level sliding by 0.74 percent to 22.97%. This will mark the second consecutive monthly decline since inflation increased in March 2025. Inflation eased primarily due to moderation in food prices, FX stability, and lower PMS prices. Interestingly, all the sub-indices moved downwards in tandem with headline inflation, except for monthly food inflation (driven by the planting season effect).
Strikingly, Borno state, an epicenter of insecurity, recorded the highest food inflation at 64.36%. This was 24.51% higher than Bayelsa (39.85%), the second-highest, and 57.46% above Katsina (6.90%), which recorded the lowest food inflation. This suggests that insecurity is a key driver of inflation, particularly food inflation. Therefore, addressing insecurity could significantly ease inflationary pressures.
Annual food inflation eased for the fifth consecutive month, declining marginally by 0.12 percent to 21.14% in May, from 21.26% in April. This slight drop is largely attributable to base year effects. This reflects a continued moderation in food prices relative to the same period last year. Similarly, core inflation (which excludes seasonal and energy costs) declined significantly by 1.11% to 22.28% from 23.39%, indicating a sustained easing in structural price pressures.
Month-on-month inflation, which provides a more current picture of inflation trends, also slowed, falling to 1.53% in May (annualised at 19.73%) from 1.86% in April.
June inflation outlook – Bracing for an upswing
While recent data reflect a modest deceleration in inflation, offering a momentary sigh of relief, Investors should brace for higher inflation in June. This uptick in inflation will be driven mainly by flooding in Mokwa, the reversal in diesel prices (especially as power supply has become more erratic), and heightened insecurity in food basket states such as Benue, Nasarawa, and Plateau.
June’s inflation data will be a key determinant of the CBN’s policy direction at its next MPC meeting, scheduled for July 21 and 22.
In the link below, the FDC Think Tank shares its estimates for May inflation and likely policy reactions.
Do enjoy your read…
