The Composite Consumer Price Index (CPI), which gauges the level of inflation in the country eased to 11.3 per cent in September from 11.7 per cent in August.
But the drop in inflation is not reflective of the marginal rise in prices of food items as a result of the flood, which ravaged many parts of the country in the period under review.
The relative stability of the naira within the period as well as crop harvesting exercises, which began late July and early August, helped to mitigate the severity of the impact on food price hike, the National Bureau of Statistics (NBS) said Wednesday.
According to its latest CPI figures, the 3.4 per cent moderation in headline inflation was also made possible by the relative slow rise in "core" index which fell to 13.1 per cent year-on-year in the period under review from 14.7 per cent the previous month.
On the one hand, the drop in inflation gave credence to Central Bank of Nigeria's (CBN's) recent monetary tightening stance which among other things was aimed at reducing inflation to single digit.
The apex bank had retained interest rate at 12 per cent and maintained the Cash Reserve Requirement of banks at 12 per cent from 8 per cent in a move to reduce the volume of cash in the system.
However, the NBS noted that food inflation rose to 10.2 per cent from 9.9 per cent in the same period.
On a month-on-month basis, the food index increased by 1.1 per cent from August.
The rise in food index was blamed largely on higher food prices in various classes including potatoes, yam and other tubers as well as fruits, bread and cereal and other foods.
"The moderation in the core index was partially as a result of base effects as the sharp rise in the index exhibited in September 2011 implies that the relative rise in September 2012 may be muted, which was the case," the report said.
In addition, the Urban inflation rate stood at 14.2 per cent year-on-year, while its rural component also indicated a 9.1 per cent year-on-year increase.
It said: "The higher food prices partially reflect impact of the floods on the production of certain crops as well as movement of food products to markets across the country. However, as harvesting of crops began in late July and early August, this impact on food prices has not been as severe."
"The average annual rate of rise of the index was 11.1 per cent year-on-year for the twelve-month period ending in September 2012," the report added.
The "All items less Farm Produce" index which isolates prices of volatile agricultural products also rose by 13.1 per cent year-on-year to 139.7 points or 1.6 per cent points lower than the 14.7 per cent recorded in August.