Nigeria’s inflation rate has declined for the second consecutive month, signalling potential relief for consumers and businesses grappling with high prices. According to the latest data from the National Bureau of Statistics (NBS), the country’s annual headline inflation rate eased to 23.18% in February, down from 24.20% in January. This follows a recent overhaul of Nigeria’s inflation data methodology, which now provides a more detailed and representative measure of price trends across the economy.
Key Highlights of the Report
- Headline Inflation: Dropped from 24.20% in January to 23.18% in February.
- Food Inflation: Declined significantly from 26.08% in January to 23.51% in February.
- Core Inflation: Remained elevated due to structural factors such as energy costs and supply chain disruptions.
This marks a shift from the consistent upward trend observed throughout much of 2024, with analysts attributing the decline to a combination of monetary tightening, improved forex liquidity, and seasonal factors affecting food prices.
What’s Driving the Inflation Decline?
Economic experts point to several factors contributing to the downward trend in inflation:
- Central Bank’s Monetary Policies: The Central Bank of Nigeria (CBN) has aggressively raised interest rates in recent months to curb inflationary pressures and stabilize the naira.
- Improved Currency Stability: Following the naira devaluation and subsequent forex market reforms, exchange rate volatility has reduced, easing cost pressures on imported goods.
- Seasonal Food Supply Improvements: Increased local food production and the onset of harvest season have led to lower food prices, reducing overall inflationary pressures.
- Government Interventions: Ongoing fiscal policies aimed at tackling supply-side bottlenecks have also played a role in easing price growth.
Sectors Still Facing Price Pressures
Despite the overall decline, some sectors continue to experience high inflation rates. Energy and transportation costs remain elevated due to lingering global oil price fluctuations. Additionally, while food inflation has moderated, staple commodities such as rice and maize still see price volatility due to logistics challenges and climate-related disruptions.
“The inflation slowdown is a positive development, but structural issues persist,” said Dr. Amina Yusuf, an economist at Lagos Business School. “To sustain this trend, Nigeria must continue to address production constraints, improve infrastructure, and ensure forex stability.”
What’s Next?
Experts believe inflation may continue on a downward trajectory if the government maintains tight monetary policies and strengthens efforts to enhance domestic production. However, risks such as currency depreciation, fiscal pressures, and global economic shocks could still pose challenges in the months ahead.
As the Tinubu administration pushes forward with economic reforms, investors and policymakers will be closely watching inflation trends to assess the broader impact on consumer purchasing power, business operations, and Nigeria’s economic stability.
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