Despite recent reports of Nigeria’s inflation rate dropping for the second consecutive month, the country’s economic reality tells a more complex story. According to the National Bureau of Statistics (NBS), inflation declined to 23.18% in February 2025 from 24.48% in January, following a CPI rebasing exercise. Food inflation also decreased from 26.08% to 23.51% within the same period. While experts from the Centre for the Promotion of Private Enterprise (CPPE) and other economic analysts view this trend as a positive indicator of economic recovery and macroeconomic stability, ordinary Nigerians continue to grapple with high living costs. NIYI JACOBS writes that the paradox of improving inflation figures without corresponding relief in everyday expenses highlights fundamental economic issues yet to be resolved. Analysts argue that while macro-level indicators appear promising, the broader population remains stuck in economic hardship, necessitating deeper policy interventions to ensure the benefits of recovery are felt across the board.
Recent data from the National Bureau of Statistics (NBS) indicating a consecutive drop in Nigeria’s inflation rate has sparked discussions about the country’s economic recovery. The inflation rate fell to 23.18% in February 2025, down from 24.48% in January, following a significant decline prompted by the rebasing of the Consumer Price Index (CPI). While experts see this trend as a positive signal of macroeconomic stability, many argue that the impact has yet to trickle down to the ordinary Nigerian who continues to grapple with high living costs.
The decline also reflects a reduction in food inflation, which dropped from 26.08% in January to 23.51% in February. However, despite the statistical improvements, the reality for most Nigerians is that prices of essential goods remain steep. The disconnect between declining inflation figures and high market prices has raised concerns over the effectiveness of government policies in addressing economic hardship.
Factors Contributing to Inflation Decline
According to Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), the recent drop in inflation can be attributed to the moderation of macroeconomic instability. The improved exchange rate, along with a slight reduction in the prices of premium motor spirit (PMS), has played a crucial role in stabilizing the inflation rate.
“We are beginning to see a drop in exchange rate volatility over the last few months. This is significant because the exchange rate is a major driver of inflation,” Yusuf explained. “Additionally, a slight reduction in energy prices such as PMS has contributed to the moderation of inflation.”
The economist further emphasized that while the inflation rate of 23.18% is a notable improvement, it is still relatively high, suggesting that the government must intensify efforts to address core issues affecting prices. He pointed out that essential commodities such as food, pharmaceutical products, cooking gas, and staple foods should be prioritized.
Yusuf also noted that improved security across agricultural regions has boosted food production, contributing to the decrease in food inflation. Enhanced farming activities and the availability of produce have helped to reduce pressure on food prices, albeit modestly.
Stabilizing Price Pressures
Prof. Godwin Oyedokun, a lecturer at Lead City University, Ibadan, offered similar sentiments, noting that the decline in inflation suggests easing pressures on the factors driving higher prices.
“The second consecutive drop in headline and food inflation could be seen as a positive indicator of an easing inflationary trend,” he said. “Improved supply chain conditions, seasonal factors affecting food production and prices, and government interventions aimed at stabilizing markets are all contributing factors.”
Prof. Oyedokun also highlighted that the declining inflation rate might be tied to policy measures aimed at curbing price increases, including interest rate adjustments and targeted subsidies for essential goods. These interventions, when effectively implemented, can provide temporary relief from high inflation.
However, he cautioned that while inflation rates are declining, the figures may not accurately capture localized price increases or the specific purchasing patterns of various consumer groups. “Inflation measurements are often averages and may not reflect localised price changes. Factors such as distribution costs, market dynamics, and producer price increases can still lead to high prices despite lower inflation rates,” he added.
Why Lower Inflation Hasn’t Reduced Living Costs
Gbolade Idakolo, CEO of SD & D Capital Management, noted that the discrepancy between falling inflation rates and persistently high prices is due to certain fundamentals of the economy remaining unresolved.
“The inflation figures are not generally reflecting on the price of goods because certain fundamentals of the economy, like the strength of the naira, exchange rates, and interest rates, remain high,” Idakolo said. “These factors make it difficult for the impact of lower inflation to be felt by the people.”
Despite the improvement in the inflation rate, the strength of the naira remains fragile, particularly against major foreign currencies. With a weak naira, the cost of imports continues to rise, feeding into higher prices of goods and services. Additionally, high interest rates have hindered economic activities, making it costly for businesses to borrow and expand.
Experts argue that while the government’s policies to address inflation are yielding results, their impact on the everyday consumer remains minimal. The inflation rate drop has not translated into reduced living costs because core economic drivers such as exchange rates and interest rates have not been adequately addressed.
Broader Implications for the Economy
The latest inflation figures do indicate a form of macroeconomic stability. However, the fact that living costs remain high suggests that the inflation drop alone is not enough to alleviate economic hardship. Analysts believe that achieving a meaningful decline in consumer prices will require addressing structural economic issues, including high energy costs, poor infrastructure, and an unstable currency.
The government must also adopt a multi-faceted approach involving monetary, fiscal, and structural reforms to stimulate economic growth. Policymakers are encouraged to target areas that have the most direct impact on consumers, such as food production, transportation, and healthcare.
Furthermore, economists argue that improved agricultural production should be matched by efficient distribution systems to ensure that food prices remain affordable. For Nigeria’s inflation decline to translate into better living conditions for the masses, policymakers will need to implement more targeted interventions aimed at enhancing productivity and stabilizing market prices.
The Road Ahead
While the decline in inflation offers hope for a gradually stabilizing economy, Nigeria remains far from economic recovery. The government’s challenge lies in ensuring that the improved figures reflect positively on the daily lives of citizens. Experts agree that without addressing the structural issues hindering economic growth, the statistical improvements in inflation will remain largely theoretical.
The current situation presents a paradox: while economic indicators point towards recovery, the majority of Nigerians continue to feel the sting of high costs. Only time will tell if the government’s policies will bridge the gap between statistical improvements and real-life economic relief
