August 2026 Inflation Report: What It Means for Nigerians

Do the numbers from the National Bureau of Statistics (NBS) on the economy still matter? No, if we listen to the Tinubu government's spokesperson on economic issues. But the recent consumer price index (CPI) report for August from the NBS has some good news for the federal government. Headline inflation dropped slightly from 15.43 percent in July to 15.39 percent in August. On a month-on-month basis, it fell from 1.57 percent to 0.71 percent. This suggests the economy might be moving toward lower inflation. Core inflation, which excludes farm produce and energy prices, was at 13 percent year-on-year and decreased by 0.06 percent month-on-month.

At Plot 33, Abubakar Tafawa Balewa Way, Central Business District, Abuja, some might argue for a careful easing of monetary policies. As the economy tries to recover from the slow pace during the Buhari years, there are strong reasons to boost private sector investment and capital formation nationwide.

Even though this policy direction sounds good, any changes in interest rates should not happen soon. The ongoing war in the Gulf is not ending anytime soon. This means high energy costs will keep pushing domestic prices up for a while. Also, while non-food and non-energy price pressures are easing, food inflation is still high at 19.57 percent.

In August, rural inflation rose to 1.79 percent month-on-month, while inflation in urban areas slowed to 0.28 percent. This difference between urban and rural inflation is concerning. It suggests that while the national average looks better, many households, especially those with lower incomes, might not see a real drop in living costs. The purchasing power in rural areas may be getting worse. If the government eases monetary policies now, energy price inflation, food inflation, and regional price shocks could quickly lead to higher inflation expectations, wages, and exchange rate pressures.

Is there a strong reason to strengthen social protection, improve food security, and upgrade rural logistics? Yes, because food and non-alcoholic beverages contributed the most to annual headline inflation in August, at 6.16 percentage points. A lot of food is produced in rural areas. The government should focus on supply-side incentives to boost productivity in agriculture and rural economies. Improving farm security, post-harvest storage, better transportation from farms to markets, and targeted agricultural services should be priorities.

It is also important to improve how public spending is structured. The main benefit is that lower inflation is good for investment planning and real incomes. Lower core inflation does not allow for untargeted fiscal spending. If unchecked, this could lead to higher domestic prices. The current focus should be on building productive infrastructure and helping vulnerable households. If food inflation remains above the general rate, poverty and nutritional risks will worsen.

The differences in inflation rates across states are significant. For policy to be effective, the government needs to look beyond the national average and focus on individual states. This approach makes it easier to provide relief and identify where supply issues occur. Spending to stimulate growth and reduce poverty will have a greater impact at the state level. The challenge for policymakers should be stabilizing food prices in the long run, not just reducing overall CPI numbers.

It would be surprising if there were no complaints about the report. Some sections in the NBS report refer to changes in percentages when they should be calling them percentage point changes. We should remember that lower inflation rates mean prices are still rising, just at a slower pace, and not that prices are back to previous levels. None of this changes the overall findings of the report. Overall, the NBS August report supports a strategy of maintaining anti-inflation policies while focusing fiscal and administrative efforts on food production, security, distribution, and supporting vulnerable rural households.