Nigeria’s Economy Shows Signs of Recovery as Inflation Drops

The two consecutive declines in Nigeria’s inflation rate, according to Nigerian experts and the Centre for the Promotion of Private Enterprise, indicate that the nation’s economy is rebounding from adversity.

In separate conversations with reporters on Monday, Muda Yusuf, the CEO of the Centre for the Promotion of Private Enterprise, Gbolade Idakolo, the CEO of SD & D Capital Management, and Prof. Godwin Oyedokun, a Don at Lead City University in Ibadan, revealed this.

They responded to Nigeria’s inflation decline in February 2025.

Nigeria’s deceleration in inflation shows macro stability — CPPE

According to the National Bureau of Statistics’ most recent Consumer Price Index, Nigeria’s inflation dropped for the second time in February 2025, from 24.48 percent to 23.18 percent. This information was released on Monday.

Food inflation decreased from 26.08 percent in January to 23.51 percent in February, according to the report.

The CPI rebasing caused Nigeria’s inflation to plummet to 24.48 percent in January.

But even if the NBS data indicated that inflation was declining, Nigeria’s cost of living remained high.

As per CPPE, the slowdown in the inflation rate can be ascribed to the moderation of macro stability.

According to Yusuf, the decline in Nigeria’s inflation rate can be attributed to both the decrease in premium motor spirit prices and the decrease in exchange rate volatility.

Nonetheless, he emphasized that Nigeria’s inflation rate is still high and that the government must devise measures to lower the cost of necessities like prescription drugs and staple foods.

“The further deceleration in inflation in February can be attributed to two factors. First is the base effect. When you relate the 2025 figure to 2024, it is expected to see further narrowing because the inflation rate is mainly year on year.

“This trend is likely to continue for the larger part of 2025. The second part is due to moderation in macro stability. We are beginning to drop in the volatility in the exchange rate in the last few months.

“This is a key factor because the exchange rate is a major driver of inflation. Also, slight reduction in energy prices such as PMS.

“However, the inflation rate of 23.18 percent is still high. This means that there is a lot of work to be done to ease inflationary pressures on citizens.

“The government should take some urgent steps to bring down the price of basic products. Foods, pharmaceutical products, cooking gas, and staple foods (bread, noodles, rice)- should be top on the agenda of government.

“Another good news is that there is an increase in food production on account of improved security,” he told newsmen.

Pressures driving higher prices are easing — Prof Oyedokun

The most recent decline in inflation, according to Oyedotun, indicates that the cause causing price increases may be stabilizing, which might benefit both firms and consumers.

“The headline and food inflation rates, which were 23.18% and 23.51%, respectively, for the second consecutive month, could be seen as a positive indication of an easing inflationary trend,” he said.

The pressure pushing prices higher may be stabilizing, he said, which could offer some respite to firms and consumers.

He added that variables influencing the drop in the inflation rate include government actions, monetary policies, seasonal factors that impact food production and prices, and improved supply chain conditions.

“Regarding the February inflation drop outside the Consumer Price Index (CPI) rebasing, several factors could contribute.

“These might include improved supply chain conditions, seasonal factors that affect food production and prices, or government interventions that stabilise markets.

“Additionally, any recent policy measures aimed at curbing inflation, such as adjustments in interest rates or subsidies for essential goods, could also play a role,” he said.

On why the inflation drop has not been reflected in market prices, he said, “As for the inflation figures not aligning with the reality of elevated prices for goods, this discrepancy could stem from various reasons.

“The CPI may not fully capture specific categories of goods that are experiencing sharp price increases. Additionally, inflation measurements are often averages and may not reflect localised price changes or the unique purchasing patterns of different consumers.

“Factors such as producer price increases, distribution costs, and market dynamics can also lead to a situation where prices remain high despite a reported decline in inflation rates”.

Why inflation rate decline doesn’t reflect on the price drop — Idakolo

Since interest rates and exchange rates have remained high due to the strength of the naira, Idakolo claimed that Nigeria’s inflation statistics do not accurately reflect the overall cost of commodities.

“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 rate, and interest rates, remain high, which have made it difficult for the impact of lower inflation to be felt by the people.

“However, if the government continues to drive down prices due to targeted policies, it would only be a matter of time before people start feeling the impact of reduced inflation on the economy,” he told newsmen.