Nigeria’s inflation rate has shown a significant decline, dropping to 24.48% year-on-year in January 2025 from 34.80% in December 2024. This decrease follows the National Bureau of Statistics’ (NBS) rebasing of the Consumer Price Index (CPI), a move aimed at providing a more accurate representation of current economic conditions and consumer spending habits.
Understanding the Inflation Decline
The rebasing process involved updating the reference year and adjusting the basket of goods and services used to measure inflation. This ensures that the inflation figures more accurately reflect the present-day realities of Nigeria’s economy. According to the NBS, urban inflation stood at 26.09%, while rural inflation was recorded at 22.15% in January 2025.
Food inflation also saw a notable decrease, with the rebased food inflation index standing at 26.08% year-on-year in January 2025, down from 39.84% in December 2024 under the old methodology. Similarly, the core inflation rate, which excludes volatile agricultural produce and energy prices, was recorded at 22.59% year-on-year in January.
Central Bank’s Response and Economic Outlook
The Central Bank of Nigeria (CBN) has responded to these developments by maintaining its benchmark interest rate at 27.50%, following six hikes in the previous year. CBN Governor Olayemi Cardoso expressed optimism about the downward trend in inflation, stating that the aim is to bring inflation down to single digits. He also noted that the central bank would analyze more rebased inflation releases to firm up its view on the inflation outlook, while monitoring potential inflationary risks such as food prices.
These developments suggest a positive trajectory for Nigeria’s economy, with the rebasing of the CPI providing a more accurate reflection of inflationary pressures and the CBN’s monetary policy stance aimed at supporting economic stability.
Conclusion
While inflation remains a pressing concern, the recent decline offers hope that Nigeria is making progress in stabilizing its economy. The impact of policy adjustments, interest rate decisions, and rebased inflation measurements will continue to shape economic strategies in the coming months. Business leaders, investors, and policymakers will closely monitor these trends as they plan for the future.
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