The National Bureau of Statistics (NBS) has reported a decline in Nigeria’s inflation rate, which fell to 23.2% in February from 24.48% in January. This decrease follows the rebasing of the Consumer Price Index (CPI), a move aimed at improving the accuracy of inflation measurements.
According to the NBS, food inflation also dropped from 25.18% in January to 23.51% in February 2025. The report highlights that the main contributors to inflation during the period were food and non-alcoholic beverages, which saw a 9.2% increase. The decline in inflation was attributed to lower prices of key food items such as beans, maize, and cassava.
Additionally, urban inflation stood at 25.15% in February. Earlier this year, the NBS updated the base year for the consumer price index from 2009 to 2024. This revision, along with methodological improvements, was implemented to enhance the accuracy and reliability of inflation data.
One significant adjustment made by the NBS was the exclusion of own-production, imputed rents, and gifted items from the calculation of inflation weights. The introduction of new indices—including the Farm Produce Index, Energy Index, Services Index, Goods Index, and Imported Food Index—provides a more detailed breakdown of inflation trends. The February report showed that the Farm Produce Index rose to 112.46 from 111.77 in January, while the Energy Index declined to 107.43. Meanwhile, the Services Index stood at 114, and the Imported Food Index increased to 113.38 from 111.47 in the previous month.
A recent moderation in food prices has been linked to the arrival of grain imports facilitated by last year’s import duty waiver. However, despite the recent decline, economists remain skeptical about achieving the government’s inflation target of 15% for 2025, given the prevailing economic challenges.
Persistent inflationary pressures in the country have been driven by high energy costs, exchange rate volatility, insecurity, and rising food prices. Over the past four years, Nigeria has experienced continuous increases in inflation, with a significant surge recorded in June 2023 following the removal of fuel subsidies and the floating of the naira under President Bola Tinubu’s administration. These policy changes led to sharp increases in fuel and import costs, which in turn triggered a higher cost of living and widespread protests over rising hunger.
To combat inflation, the Central Bank of Nigeria (CBN) has consistently raised the Monetary Policy Rate (MPR). In 2024, the CBN increased interest rates multiple times—from 18.75% to 22.75% in February, 24.75% in March, 26.25% in May, 26.75% in July, 27.25% in September, and 27.5% in November. However, experts argue that these rate hikes have not been effective in curbing inflation and may, in fact, be contributing to the problem.
Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), has criticized the CBN’s approach, emphasizing the need to address supply-side challenges such as foreign exchange shortages, insecurity, and declining purchasing power. His concerns align with warnings from the International Monetary Fund (IMF), which has cautioned that excessive interest rate hikes could exacerbate inflation rather than control it. Similarly, Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, recently echoed the IMF’s concerns, calling for a more balanced approach to inflation management.
As Nigeria navigates these economic challenges, the effectiveness of monetary policies and structural reforms will play a crucial role in determining the country’s inflation trajectory in the coming months.
