Nigeria’s inflation rate is expected to continue its downward trend in May 2026, according to a new forecast released by the Financial Markets Dealers Association (FMDA).
The association said the expected decline is mainly due to stable food prices across the country and reduced pressure on the cost of essential commodities. It noted that favorable market conditions and statistical base effects are helping to ease inflationary trends.
In its May 2026 inflation outlook, FMDA projected that headline inflation would rise by just 0.95 percent on a month-to-month basis. This represents a significant slowdown compared to the 2.13 percent increase recorded in April.
On a yearly basis, the association expects inflation to fall further to about 15.02 percent. According to the report, the reduction reflects slower increases in prices over recent months and improving stability in key sectors of the economy.
A major factor behind the forecast is the relative stability in food prices. FMDA cited findings from the World Bank’s food market survey, which showed that the food price index remained unchanged at 3.92 during May.
While some food items experienced price increases, others became cheaper, helping to balance overall food costs. Prices of fish, beef, yam, and eggs rose during the month, but declines in the prices of beans, onions, and rice helped offset those increases.
The association explained that this balance in food prices is expected to play an important role in keeping inflation under control. Since food accounts for a large portion of household spending in Nigeria, stable food prices can significantly influence the overall inflation rate.
Despite the positive outlook, FMDA warned that several economic challenges could still put pressure on prices.
One of the concerns highlighted in the report is the performance of the naira. During May, the local currency weakened slightly, depreciating by 0.64 percent. The average exchange rate moved to about N1,370 per dollar from N1,361.22 per dollar in April.
According to FMDA, a weaker naira could make imported goods and production materials more expensive. This may increase costs for manufacturers and contribute to higher prices for consumers in the future.
The report also pointed to persistently high fuel prices as another inflation risk. Petrol prices remained between N1,400 and N1,500 per litre during the month. Elevated fuel costs continue to affect transportation expenses and production costs across various sectors of the economy.
“Overall, stable food prices may help contain inflationary pressures in May. However, exchange rate depreciation and elevated fuel costs are expected to keep underlying inflation pressures firm,” the association stated.
Beyond Nigeria, FMDA noted that inflation remains high in several major economies around the world. It also observed rising international food prices driven by higher energy costs, increasing fertilizer prices, and ongoing geopolitical tensions affecting global supply chains.
The association highlighted recent increases in the global prices of wheat, maize, and rice, warning that these developments could contribute to imported inflation in Nigeria over the coming months.
Nevertheless, FMDA remains optimistic that stable domestic food prices and favorable base effects will support a further easing of inflation in May 2026, providing some relief for households and businesses struggling with the high cost of living.
