Nigeria’s Inflation Eases Slightly, but Challenges Remain
The National Bureau of Statistics (NBS) reported a slight easing of Nigeria’s inflation rate in April 2025, offering a glimmer of hope amidst persistent economic challenges. Headline inflation moderated to 23.71% year-on-year, down from 24.23% in March and a significant drop from 33.69% in April 2024. This deceleration was reflected in both urban and rural inflation rates, although they remained elevated at 24.29% and 22.83% respectively. The month-on-month inflation also decreased significantly, suggesting a slower pace of price increases during April. This positive trend was attributed to a change in the base year for calculations and falling prices of essential food items like maize flour, wheat grain, and various beans.
Despite the national improvement, a stark disparity emerged across states. Ten states and the Federal Capital Territory (FCT) recorded inflation rates exceeding 30%, highlighting the uneven distribution of inflationary pressures. Enugu led with the highest headline inflation at 36%, followed by Kebbi at 35.1% and Niger at 34.8%. These states experienced varying degrees of month-on-month increases, with Niger recording the highest jump at 14.7%. Food inflation remained a major contributor to the high inflation rates in these states, underscoring the ongoing cost-of-living crisis faced by many Nigerians. Benue State presented a particularly concerning situation with food inflation reaching a staggering 51.8% due to persistent insecurity in the region.
The easing national inflation, driven by lower food prices, provided some respite. Food inflation slowed considerably to 21.26% year-on-year in April 2025, a sharp decline from 40.53% in the same period of 2024. This reduction was attributed to the change in the base year and falling prices of staples. Month-on-month food inflation also edged down slightly. Core inflation, excluding volatile food and energy prices, also moderated to 23.39% year-on-year, suggesting broader price stabilization. However, energy prices saw a steep rise, indicating potential future inflationary pressures.
The private sector remained cautious despite the positive signs. Representatives from various business organizations expressed skepticism about the real impact of the slight easing in inflation. They argued that the marginal decline had yet to translate into tangible benefits for businesses, particularly Micro, Small, and Medium Enterprises (MSMEs). High input costs, weak consumer purchasing power, and limited access to affordable financing continued to hinder MSME operations. They called for sustained macroeconomic gains and targeted support policies to alleviate the pressures on the sector and stimulate economic growth and job creation. The Lagos Chamber of Commerce and Industry (LCCI) also termed the inflation drop "unremarkable," emphasizing the need for sustained and more significant reductions before celebrating.
The LCCI highlighted the importance of addressing structural issues driving inflation, such as high transportation costs. They advocated for faster adoption of cheaper transportation alternatives like Compressed Natural Gas (CNG) and electric vehicles but acknowledged the high upfront costs hindering this transition. They anticipated a gradual decline in inflation over the coming months but warned against expecting any immediate impact on interest rates. The LCCI cautioned against expecting significant drops in the Monetary Policy Rate (MPR) in the near term, suggesting that the Central Bank of Nigeria (CBN) might opt for smaller reductions to signal future easing.
The World Bank projected an average inflation rate of 22.1% for Nigeria in 2025, attributing the anticipated decline to the CBN’s tight monetary policy aimed at restoring price stability. The bank acknowledged the persistent challenges of high inflation but expressed optimism about the effectiveness of the CBN’s measures. They identified keyinflation drivers as petrol subsidy removal, exchange rate unification, rising logistics and energy costs, and food supply disruptions. However, they noted that the CBN’s monetary tightening was beginning to yield positive results, with inflationary pressures expected to ease further. Addressing the root causes of inflation through improved agricultural productivity, enhanced supply chain efficiency, stable energy prices, and increased market competition remain crucial for long-term price stability and sustainable economic growth.
