Monthly Digest – September 2026

Contents

1. Food inflation Rises

2. Treasury Bills Attract Demand

3. CBN Opens OMO Market

4. FX Liquidity Improves

5. Nigeria’s Foreign Reserves Rise Above $52 Billion

6. Money Market Funds Grow

7. Economic Reforms Show Gains

 

FOOD INFLATION RISES

Food inflation climbed for the fifth consecutive month to 20.31% in July, despite a moderation in Nigeria’s headline inflation rate.

Nigeria’s food inflation rate rose for the fifth consecutive month in July, reaching 20.31%, as prices of several food items continued to increase. The latest figure represents a 2.79 percentage-point increase from 17.52% recorded in June, marking the first time food inflation has crossed the 20% threshold since February 2021.

The National Bureau of Statistics (NBS) released the figures in its July 2026 Consumer Price Index report published in August. On a year-on-year basis, food inflation stood at 20.31%, compared with 26.20% recorded in July 2025.

On a month-on-month basis, however, food inflation accelerated to 5.56% in July, compared with 3.75% in June. This indicates that food prices increased at a faster pace during the month.

The NBS attributed the increase to changes in the average prices of several food items, including crayfish, fresh pepper, onions, carrots, rice, water yam, tomatoes, garri, plantain, beef, eggs, guinea corn, ginger and plantain flour.

Food inflation varied considerably across states. On a year-on-year basis, Adamawa recorded the highest rate at 51.36%, followed by Katsina at 30.84% and Zamfara at 30.65%. At the other end of the scale, Borno recorded a slight decline of 0.31%, while Nasarawa and Kebbi recorded rates of 6.88% and 12.50%, respectively.

On a month-on-month basis, Adamawa again recorded the highest increase at 17.02%, followed by Lagos at 13.48% and Borno at 13.26%. Jigawa, Kebbi and Bauchi recorded declines during the month.

The rise in food inflation came despite a broader moderation in headline inflation. Nigeria’s headline inflation rate fell for the second consecutive month to 15.43% in July, from 15.91% in June. Core inflation also declined to 14.97% from 15.92%, while month-on-month headline inflation eased to 1.57% from 1.66%.

The figures therefore present a mixed inflation picture: overall price pressures moderated, but food prices moved in the opposite direction, continuing to put pressure on household budgets and consumer purchasing power.

 

 

TREASURY BILLS ATTRACT DEMAND

Investors submitted ₦4.41 trillion in bids for ₦700 billion offered at the CBN’s August 12 Treasury Bills auction.

Investor appetite for Nigerian Treasury Bills remained strong in August, with the Central Bank of Nigeria (CBN) recording one of the year’s strongest subscription levels for government short-term securities.

At the Treasury Bills auction held on August 12, 2026, investors submitted approximately ₦4.41 trillion in bids for ₦700 billion offered across the 91-day, 182-day and 364-day instruments. Demand was therefore more than six times the amount initially offered.

The strongest interest was concentrated in the 364-day Treasury Bill, which attracted ₦4.19 trillion in subscriptions against ₦500 billion offered. The CBN ultimately allotted about ₦1.26 trillion of the 364-day instrument.

The 91-day bill attracted ₦162.21 billion in bids, with ₦148.57 billion allotted, while the 182-day bill received ₦63.97 billion in subscriptions, with ₦47.48 billion allotted.

The heavy demand was accompanied by a rise in the stop rate on the benchmark 364-day instrument. The rate increased by 24 basis points to 17.59%, from 17.35% at the previous auction. The 91-day and 182-day rates remained unchanged at 16.30% and 16.50%, respectively.

Across all three tenors, the CBN allotted approximately ₦1.46 trillion, more than twice the ₦700 billion initially advertised. The combination of high demand and elevated yields continued to make short-term government securities an important destination for investors seeking relatively attractive returns.

The strong appetite for Treasury Bills was also reflected elsewhere in the fixed-income market during August. On August 13, investors submitted another ₦4.93 trillion for ₦600 billion of Open Market Operations securities offered by the CBN, highlighting the depth of demand for short-term naira-denominated instruments.

The developments point to continued investor preference for fixed-income securities amid relatively high yields and ongoing demand for liquid investment instruments.

 

 

CBN OPENS OMO MARKET

The CBN opened its Open Market Operations market to individuals, corporates and non-bank financial institutions, expanding access to short-term government securities.

The Central Bank of Nigeria introduced a significant change to the country’s financial-market structure in August by opening participation in its Open Market Operations (OMO) securities to a much broader group of investors.

Under a circular dated August 12, 2026, the CBN said eligible individuals, corporates and non-bank financial institutions could participate in both the primary and secondary OMO markets through Deposit Money Banks. Banks will submit bids and settle transactions on behalf of their customers.

The move also removed restrictions that had prevented banks participating in the Nigerian Foreign Exchange Market or primary government-securities auctions from accessing the CBN’s Discount Window. The CBN said the changes followed developments in the foreign exchange, money and fixed-income markets.

The bank also reinstated Tenored Repurchase Operations, allowing repo transactions across approved maturities of between four and 90 days. The facility is intended to provide the CBN with greater flexibility in managing liquidity and improving the functioning of the money market.

The new OMO framework generated immediate investor interest. At the CBN’s August 13 auction, investors submitted ₦4.93 trillion in bids against ₦600 billion offered. The CBN eventually allotted about ₦2.60 trillion, with the 103-day instrument clearing at 20.39% and the 138-day instrument at 20.01%.

The reopening of the OMO market also came as Nigerian equities experienced increased selling pressure. The NGX All-Share Index fell 1.35% during the week ended August 21, while market capitalization declined by approximately ₦2.09 trillion. Some market participants linked the weakness partly to the emergence of higher-yielding fixed-income alternatives, although profit-taking and other market factors also contributed.

The policy represents an important development for Nigeria’s financial markets, giving a wider pool of investors access to a short-term instrument previously unavailable to them.

 

 

FX LIQUIDITY IMPROVES

Higher foreign-exchange inflows and stronger trading activity supported improved liquidity and helped ease pressure on the naira during August.

Nigeria’s foreign exchange market showed signs of improved liquidity in August, supported by stronger foreign-exchange inflows and increased market activity.

The naira strengthened during the month, with the official Nigerian Foreign Exchange Market (NFEM) rate closing around ₦1,346.49 per US dollar on August 21, compared with ₦1,357.61 the previous week. The movement reflected relatively improved conditions in the official FX market.

The improvement followed stronger foreign-exchange inflows. Nigeria recorded approximately $4.4 billion in FX inflows in July, representing a 59% increase from June. Domestic sources accounted for the largest share, with inflows rising to about $2.9 billion.

The CBN also increased its foreign-exchange sales during the period, while exporters contributed additional dollar supply through export proceeds.

Trading activity recovered strongly during August as well. NFEM turnover reportedly reached approximately $1.41 billion on August 17, compared with about $185 million recorded on August 11. The stronger turnover came alongside a naira rate of around ₦1,350 per dollar.

The improvement in market activity occurred alongside a broader strengthening of Nigeria’s external position, although the foreign exchange market continues to face strong demand for dollars from businesses, importers and other market participants.

The more stable official-market conditions have also reduced some of the pressure that businesses faced during periods of severe foreign-exchange shortages. However, continued stability will depend on the sustainability of foreign-exchange inflows, oil earnings, capital flows and overall investor confidence.

 

 

NIGERIA’S FOREIGN RESERVES RISE ABOVE $52 BILLION

Nigeria’s external reserves continued their upward trend in August, reaching $52.66 billion as of August 19, 2026, according to data from the Central Bank of Nigeria.

The latest figure represents an increase of approximately $7.09 billion, or 15.6%, from the $45.57 billion recorded at the beginning of the year. The increase has significantly strengthened Nigeria’s external liquidity position.

The accumulation has not been completely uninterrupted. Reserves declined by approximately $855 million between April and early May, falling from $49.18 billion to $48.33 billion. They subsequently recovered, crossing the $50 billion mark in June and moving above $52 billion in July.

The upward trend continued into August. Reserves rose from about $51.94 billion on August 3 to $52.66 billion on August 19, representing an increase of approximately $715 million in less than three weeks.

The latest position represents the highest reserve level in more than 17 years and is above the CBN’s 2026 projection of approximately $51.04 billion.

A stronger reserve position provides the country with a larger external buffer for meeting international obligations and managing periods of pressure in the foreign exchange market. The increase also coincided with improved conditions in the FX market, with the naira trading around ₦1,346.90 per dollar on August 21.

Analysts have linked the reserve accumulation to stronger dollar earnings and increased capital inflows. However, maintaining the gains will continue to depend on factors such as oil revenues, foreign investment and the broader performance of the foreign exchange market.

 

 

MONEY MARKET FUNDS GROW

Money market fund assets rose to ₦6.27 trillion in July as more investors turned to short-term, income-generating investment products.

Nigeria’s money market fund industry continued to expand in July, with total net asset value rising to ₦6.27 trillion as of July 31, 2026.

Data compiled from the Securities and Exchange Commission (SEC) showed that the figure represented a 4.96% increase from ₦5.97 trillion in June, further strengthening money market funds’ position as the largest segment of Nigeria’s mutual fund industry.

Investor participation also increased during the month. The number of money market fund unitholders rose to 846,933, representing an increase of 46,883 investors, or 5.86%, from the previous month.

Money market funds accounted for approximately 66.74% of total mutual fund assets, up from 65.52% in June. The number of money market funds also increased to 48, giving investors a wider range of short-term investment options.

The continued expansion comes against a backdrop of relatively high yields in Nigeria’s fixed-income market. Money market funds typically invest in short-term instruments and have therefore remained attractive to investors looking for liquidity and income without taking on the price volatility associated with equities.

Performance across the sector was also notable. DLM Money Market Fund recorded a year-to-date yield of 20.69%, followed by Coronation Money Market Fund at 20.22% and RT Briscoe Savings & Investment Fund at 20.13%, according to the August report.

The increase in both assets and investor numbers suggests continued demand for short-term investment products as Nigerians and institutional investors seek to put excess funds to work in a high-yield environment.

 

 

ECONOMIC REFORMS SHOW GAINS

The Federal Government said ongoing reforms have strengthened public finances, reserves and investment flows, while acknowledging continued pressure on households.

Nigeria’s economic reforms have helped strengthen public finances, improve the country’s external position and attract investment, according to Finance Minister and Coordinating Minister of the Economy Taiwo Oyedele.

Speaking on August 19, 2026, Oyedele said reforms introduced since 2023 had helped Nigeria avoid a deeper economic crisis. The reforms included the removal of the petrol subsidy and changes to the foreign-exchange system.

According to the minister, the reforms had contributed to stronger public finances and improved foreign reserves, while also attracting support from international investors and lenders.

However, the minister acknowledged that the reforms have come with significant short-term costs for households. The removal of the fuel subsidy and changes in the exchange rate contributed to higher living costs, creating continued pressure on consumers even as some macroeconomic indicators improved.

Oyedele said the government’s reforms had also helped narrow the gap between the official and parallel foreign-exchange markets and strengthen Nigeria’s external position.

Capital inflows have also improved. According to government figures presented during the reform assessment, capital importation increased significantly between the first quarter of 2023 and the first quarter of 2026.

The government’s assessment therefore presents a mixed picture of Nigeria’s economic transition. On one side, reserves, investment flows and public finances have improved; on the other, households and businesses continue to deal with the effects of higher prices and adjustment costs.

The government has said the next phase of its economic programme will place greater emphasis on translating macroeconomic improvements into better living conditions, including through poverty reduction, food affordability and social-protection measures.

 

 

 

SOURCES: Nariametrics, Businessday, istock images, Shutterstock, Punch newspaper, Reuters, Guardian News, ICIR Nigeria, Premium Times, Leadership News, Vanguard News, Daily Times Nigeria, Linda Ikeji’s Blog, Finance in Africa, Daily Post, Terrapass, Agora Policy, Nairaland.

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