Nigeria has recorded single-digit food inflation for the first time in over a decade, but economists, policy analysts, and agricultural stakeholders caution that the sharp decline may not translate into lasting relief for households or producers.

According to the latest Consumer Price Index report released by the National Bureau of Statistics, headline food inflation moderated slightly to 15.1 percent in January 2026 from 15.15 percent in December 2025. Food inflation, the largest component of the consumption basket, fell sharply to 8.89 percent year on year, down from 29.63 percent in January 2025. On a month-on-month basis, food prices declined to negative 6.02 percent from negative 0.36 percent in December, indicating deflationary pressure rather than mere price moderation.

The descent has been rapid. Food inflation had surged to crisis levels in 2024, reaching an all-time peak of 40.87 percent in June of that year and pushing millions of households toward food insecurity. Historical data shows that food-driven inflation has remained in double digits since mid-2015, making the current single-digit reading an anomaly in recent economic history.

Analysts attribute the cooling to a mix of aggressive monetary tightening, seasonal harvest effects, relative currency stability, and increased food imports. However, the same forces easing consumer prices are now threatening the viability of domestic agriculture.

The Centre for the Promotion of Private Enterprise described the development as real disinflation rather than temporary volatility, noting broad easing across both food and core inflation components. Yet the organisation warned that collapsing prices could destabilise farm incomes and rural economies if left unmanaged.

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Fast-falling prices, while beneficial to consumers, are already eroding farmers’ margins at a time when production costs remain elevated. Agrochemicals, seeds, energy, and transport expenses have not declined at the same pace, creating a squeeze between input costs and market prices.

The centre warned that sustained weakness in farm-gate prices could reduce farmers’ revenues and investment capacity, weaken rural purchasing power, discourage agricultural production, and ultimately create future supply shortages and renewed inflation pressures.

For households, food typically accounts for the largest share of expenditure, meaning any price reduction has immediate welfare implications. The CPPE noted that easing inflation improves real purchasing power, particularly for low-income consumers, but stressed that the benefits could prove temporary without structural support for domestic production.

The policy risks extend beyond agriculture. The CPPE argued that disinflation opens space for cautious monetary easing, “though this must remain data-driven given that core inflation and 12-month average inflation remain elevated at 17.72 percent and above headline inflation respectively.”

State-level disparities in inflation trends also highlight persistent bottlenecks in transport, security, and supply chains, suggesting that price formation is influenced as much by logistics as by macroeconomic policy.

Import flows have played a decisive role in the current price environment. Nigeria spent ₦5.27 trillion on food and beverage imports in the first nine months of 2025, according to official data, flooding domestic markets with cheaper alternatives that undercut local producers.

This has created a paradox in the agricultural sector. Retail food prices are falling, yet farmers face rising costs for inputs such as fertiliser and agrochemicals, shrinking profit margins and threatening long-term production capacity.

Traditional leaders and industry groups have voiced concern. The Emir of Kano, Muhammadu Sanusi II, urged the Federal Government to halt food importation, arguing that farmers invest heavily in production but cannot recover costs when competing with subsidised imports.

Agribusiness stakeholders warn that insecurity in farming regions and high input prices remain unresolved. The President of the Nigeria Agribusiness Group, Kabir Ibrahim, cautioned that smallholder farmers face severe pressures that could destabilise the food system in the coming years if not addressed.

To mitigate these risks, the CPPE called for a rules-based farm price stabilisation and income protection framework. The organisation suggested minimum guaranteed prices for key commodities such as maize, rice paddy, sorghum, and soybeans, designed as a stabilising backstop rather than an open-ended government procurement scheme.

It warned that without mechanisms to protect farmers from price crashes, harvest-time gluts could trigger distress sales, undermine livelihoods, and discourage future planting cycles.

For businesses and investors, lower inflation signals a potential recovery in real household demand, opening opportunities in consumer goods, retail, logistics, and services. However, disinflation also limits companies’ ability to rely on price increases for revenue growth, shifting the focus toward efficiency, productivity, and scale.

The CPPE noted that weaker primary food prices could compress margins in crop production while strengthening the investment case for storage, processing, cold-chain infrastructure, and export-oriented agribusiness.

Policy analysts emphasise that the central challenge is sustaining price stability without undermining production incentives. The centre stressed that balancing consumer relief with agricultural viability will determine whether the current trend translates into durable stability, inclusive growth, and improved investor confidence.

“Without mechanisms to protect farmer incomes and incentivise domestic production, today’s single-digit inflation could sow the seeds of tomorrow’s food shortages, creating a contraction cycle that serves neither producers nor consumers in the long term,” the CPPE stated.

The path to the current slowdown has been turbulent. Food inflation accelerated sharply in 2024 due to fuel subsidy removal, currency devaluation, insecurity in farming communities, and global supply disruptions. Government efforts to stabilise prices included a duty-free import window for essential foods introduced in July 2024, although bureaucratic hurdles limited its effectiveness.

Research firms expect the moderation to continue in the near term but caution against over-optimism. Cowry Research projected that inflation will maintain a softer trajectory due to improved foreign exchange stability, relatively subdued energy prices, and favourable base effects from previously high price levels.

The firm said the slowdown in headline and core inflation indicates easing underlying pressures, which could reinforce confidence in the broader macroeconomic environment. However, it warned that structural constraints, including logistics bottlenecks, insecurity in food-producing regions, and weather disruptions, could still trigger localised price spikes.

Cowry Research also noted that recent CPI normalisation creates a lower statistical base for year-on-year comparisons, meaning inflation could rise again later in the year, potentially driven by election-related spending and fading base effects.

In the short term, the firm expects headline inflation to ease further to 14.78 per cent in February 2026, supported by moderation in food and core components and continued appreciation of the naira following recent policy actions.

For now, the return to single-digit food inflation reflects a complex mix of seasonal supply, imports, policy measures, and statistical effects. Whether it marks genuine, durable relief or merely a temporary dip will depend on developments in security, agricultural productivity, currency stability, and government policy in the months ahead.

Meiza Nigeria