The MD/CEO of Macrostrat Nigeria Limited, Dr Justin Amase, has attributed the recent decline in Nigeria’s headline inflation to the Central Bank of Nigeria’s tight monetary policy, relative stability in the exchange rate and gradual easing of supply-chain bottlenecks.
Amase said the decline was reflected in the July 2026 inflation figures, noting that while headline and core inflation moderated, food inflation moved in the opposite direction. He explained that the overall decline was largely supported by measures implemented by the Central Bank of Nigeria, particularly its aggressive monetary tightening, which has reduced lending and liquidity in the financial system.
“If you look at the July 2026 inflation report, the headline component as well as the core inflation components are all declining. Only the food inflation component is rising.
“Now, if you take the headline component, which is the aggregate component, a lot of the decline that has been achieved, especially, is due to policies that have been executed by the Central Bank of Nigeria. The aggressive tightening—which has lifted the Monetary Policy Rate at this moment to 26.5%—has discouraged a lot of lending and borrowing, so there is a limited amount of money and liquidity in the system.
“The next factor is the stability of the exchange rate. For some time, the exchange rate has been quite stable, so the prices of imports are virtually at the same level for quite some time, and that has helped inflation.
“Then, we also have the fact that over time, the supply chain bottlenecks have been reducing gradually, especially post-COVID-19. There is a gradual restoration of the supply chain, even though we have a lot of other issues in the supply sector that are actually driving inflation—because inflation in Nigeria is basically driven now by structural factors and not demand factors,” Dr Amase explained.
On the rise in food inflation, Amase explained that, unlike headline inflation, food prices are being driven mainly by structural challenges. He identified the off-season period, logistics bottlenecks, high input costs, poor rural access roads and insecurity as major factors constraining food production and distribution across the country.
According to him, the off-season had limited the availability of some essential food items, with increased harvests expected to ease food inflation slightly as the rainy season progresses.
“Food inflation is actually driven primarily by structural factors. For instance, for the current month’s report, especially for recent months, food inflation figures have been driven mainly by three major factors: The Off-Season Period: A lot of the essential food items’ harvest has not actually been done yet because of the period. Maybe by the time we have this rainy season and more harvest is done, you can see a slight decline in food inflation.”
He also identified logistics challenges, including insecurity, poor rural access roads and limited access to markets, as major constraints affecting the movement of food from farms to consumers.
“Logistics Bottlenecks: That has been a major problem, and the structural factors are there—issues of insecurity, poor rural access roads, and lack of access to markets.”
On rising production costs, the economist, who described himself as a part-time farmer, said he had suspended farming activities this year because the cost of production had become higher than the returns.
“Cost of Inputs: I am a part-time farmer, but I had to suspend production this year because in the last two years, what I produced—the cost of production—was much higher than the value I was able to sell and return on what I did. The cost of inputs, from fertilizer to herbicides and other inputs, was much higher, especially the cost of hiring people to clear and cultivate. All these costs are high, and the return is poor,” he lamented.
Amase said state and local governments have a key role in tackling transport, logistics and storage challenges but noted that weak fiscal management and inadequate capital spending have limited investment in critical infrastructure. He also cited post-harvest losses and flooding as major threats to food production.
“They actually have a role. The situation we have in Nigeria at the moment is a fiscal federalism problem. Even though at the moment we have independence or autonomy for local governments, the truth of the matter is that fiscal resources allocated at the sub-national level—for instance, for a lot of these projects—suffer a lot of leakages, so they end up not being used for that purpose.
“Of course, the major casualty of budget implementation in Nigeria has always been capital expenditure, and all these facilities you are talking about are provided through capital votes. These capital votes have not been released for some time. So even at the federal level, it is the same thing as the state level—there is barely much new investment in some of these infrastructure assets. So these problems compound.
“The issue of storage, for instance, is very important because post-harvest losses account for up to 40% of losses of farm produce. So these problems should be addressed. The issue of flooding, for instance—a lot of flooding is expected this year, and it’s going to affect farmers. So these are key issues that should be addressed at the fiscal level,” he said.
On the way forward, Dr Amase called for coordinated fiscal and monetary policies to tackle food inflation, with priority given to reducing input and transportation costs, improving irrigation, addressing insecurity and encouraging private investment in large-scale farming.
” I think it is a matter of policy prioritization. Right from last year, food inflation was the major driver of inflation in Nigeria, so there has to be a national consensus around what is to be done. In other words, we prioritize measures both at the fiscal and monetary levels to address food inflation.
“Prioritize High-Need Food Sectors: Government should look at food production sectors that require high-priority attention. Just like we have the fertilizer initiative driven by the Ministry of Finance, similar policies to reduce the cost of inputs as well as address issues of irrigation are needed.
“Incentivize Private Investment: How do you encourage and incentivize private sector investors in farming so that they can produce massively?
“Address Key Bottlenecks: Address major issues like insecurity—that is a major challenge—and other bottlenecks like the high cost of transportation and high prices of inputs. All of that should be addressed and prioritized by Nigeria, and strategic resources have to be allocated,” he stressed.
The MD/CEO also disclosed that Macrostrat had organised a webinar on inflation and measures to reduce the cost of living, where further recommendations were discussed.
“Macrostrat organized a webinar on inflation and how we can reduce the cost of living today, and all the measures are there.”
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