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LAGOS – Nigeria’s inflation rate is expected to edge higher for the fourth consecutive month in June 2026, setting the stage for another crucial monetary policy decision by the Central Bank of Nigeria (CBN) later this month.
Analysts at United Capital Research projected that headline inflation would rise marginally to 15.95 percent in June from 15.93 percent recorded in May, with the increase driven primarily by higher food prices, particularly the sharp rise in the cost of tomatoes.
If the projection materialises when the National Bureau of Statistics (NBS) releases its inflation report, it will represent the fourth consecutive monthly increase in consumer prices, although analysts insist the latest uptick reflects seasonal factors rather than renewed inflationary pressures.
The anticipated rise comes just weeks before the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) meets on July 20 and 21, where policymakers will decide whether to tighten monetary policy further or maintain the current benchmark interest rate.
Tomatoes Push Inflation Higher
According to United Capital Research, food prices recorded mixed movements during June, but the sharp increase in tomato prices proved significant enough to nudge overall inflation upward.
The investment house explained that tomatoes remain one of the most widely consumed food items in Nigerian households and restaurants, making fluctuations in their prices a major driver of consumer inflation.
Analysts attributed the increase to seasonal supply shortages following the end of the dry-season harvest and the commencement of the rainy season, which typically disrupts production and distribution.
The report also showed that yam prices rose by about eight percent during the month, adding further pressure to household food expenditure.
However, not all food items became more expensive.
Rice prices recorded a marginal decline as both locally produced and imported varieties became cheaper, while bean prices fell by about five percent, helping to cushion the overall rise in food inflation.
Lower Fuel Prices Soften Inflation Pressure
While food prices pushed inflation upward, declining energy costs helped prevent a sharper increase.
United Capital noted that easing geopolitical tensions following the de-escalation of the conflict involving the United States and Iran contributed to a significant drop in global crude oil prices.
The average price of Bonny Light crude fell by 21.81 percent to 87.70 dollars per barrel in June from 112.16 dollars in May.
The decline filtered into the domestic market, leading to lower petrol prices.
According to the report, the average pump price of premium motor spirit (PMS) dropped by about five percent to N1,249 per litre in June compared with N1,312 per litre in May.
Lower fuel prices reduced transportation and logistics costs, helping to moderate inflationary pressures arising from higher food prices.
Naira Records Mixed Performance
The report also highlighted mixed movements in the foreign exchange market during the review period.
On a monthly average basis, the naira appreciated slightly by 0.2 percent, improving from an average exchange rate of N1,370 per dollar in May to N1,367 per dollar in June.
However, on a month-end basis, the domestic currency weakened marginally, closing June at N1,380 per dollar compared with N1,373 per dollar at the end of May.
Analysts said the exchange-rate movement had only a limited impact on inflation during the month.
Seasonal Peak Expected
Despite forecasting another increase in inflation, United Capital maintained an optimistic outlook for the coming months.
The firm expects inflation to remain within the 15 percent range between July and October before gradually easing as the harvest season improves food supply across the country.
According to the analysts, the recent increases in tomato and yam prices are largely seasonal and should reverse as fresh harvests enter the market.
This suggests that June could represent the peak of the current inflation cycle rather than the beginning of another prolonged surge in consumer prices.
Improved agricultural output, combined with lower logistics costs and relatively stable exchange rates, is expected to support a gradual moderation in inflation during the second half of the year.
CBN Expected To Hold Rates
Although inflation is projected to rise again, United Capital does not expect the MPC to respond with another interest-rate increase.
Instead, the research firm believes the CBN will likely retain the current monetary policy stance while continuing to manage liquidity through Open Market Operations (OMO) rather than tightening policy further.
Analysts argued that the projected increase is too marginal and largely reflects temporary food supply disruptions rather than broad-based inflationary pressure requiring additional monetary tightening.
Keeping interest rates unchanged, they noted, would allow policymakers to monitor inflation trends while supporting economic growth.
Fixed Income, Equities Outlook
United Capital expects yields in the fixed-income market to remain broadly stable in the near term unless inflation rises more sharply than anticipated or monetary authorities introduce unexpected policy measures.
The research house also expressed optimism about the equities market following its sharp correction in June.
According to the report, the recent sell-off has pushed stock valuations into oversold territory, creating attractive buying opportunities for investors ahead of the release of half-year corporate earnings.
Analysts believe stronger-than-expected earnings from listed companies, particularly banks and industrial firms, could trigger renewed buying interest and support a rebound in the Nigerian Exchange during the second half of the year.
Markets Await Inflation Data
With inflation expected to edge higher and the July MPC meeting fast approaching, investors, businesses and households will closely watch the official inflation figures for clues about the CBN’s next policy direction.
A higher-than-expected inflation reading could renew calls for tighter monetary policy, while a figure close to United Capital’s projection would likely strengthen expectations that the MPC will keep rates unchanged and rely on liquidity management tools to contain inflation.
For now, analysts believe the modest increase expected in June is more reflective of seasonal food supply challenges than a resurgence of underlying inflation, reinforcing hopes that price pressures will gradually ease as the harvest season gathers momentum.
