Nigeria’s headline inflation eased to 18.02% year-on-year in September 2025, marking the sixth consecutive monthly decline in the country’s inflation rate. The latest Consumer Price Index (CPI) report from the National Bureau of Statistics (NBS) indicates continued moderation in price pressures across key sectors of the economy.
The September figure represents a drop from 20.12% in August 2025, highlighting a gradual easing of inflationary pressures after months of sustained price surges. On a month-on-month basis, the headline inflation rate stood at 0.72%, reflecting slower price increases compared to previous months.
Drivers of the Decline
Food Inflation: Gradual Relief but Still Elevated
Food inflation remains the most critical component of Nigeria’s inflation basket. In September 2025, food inflation fell marginally on a monthly basis, with a recorded decline of 1.57% month-on-month, suggesting slight moderation in food prices across categories such as grains, oils, and vegetables.
Despite the month-on-month easing, food inflation remains high year-on-year, reflecting lingering supply constraints, logistics costs, and insecurity in food-producing regions. Earlier in the year, food inflation hovered above 22%, underlining the challenge of restoring affordability in food markets.
While the latest figures bring relief to households, the persistence of elevated food prices continues to affect disposable incomes. Analysts attribute the moderation largely to improved harvests, increased market supplies, and short-term government interventions aimed at stabilizing prices of key staples.
Core Inflation: Moderate but Sticky
Core inflation, which excludes volatile items like food and energy, also showed signs of softening. As of August, it stood at 20.33% year-on-year, continuing a gradual downward trend as foreign exchange pressures eased and transportation costs stabilized.
Month-on-month, however, core inflation recorded a mild uptick of 1.43%, up from 0.97% in July, reflecting residual price pressures in non-food items such as housing, healthcare, and imported goods.
Economic analysts predict that core inflation will likely drop below 20% in the coming months if stability in exchange rates and energy costs is maintained.
Economic Context and Implications
Impact of the New CPI Base Year
The NBS recently rebased the Consumer Price Index from a 2009 base year to 2024, realigning the inflation basket with current consumption patterns. This rebasing contributed to the visible decline in inflation rates in 2025 by providing a more accurate and contemporary measurement of price changes.
Earlier in the year, inflation peaked at 34.80% in December 2024 before sharply declining to 24.48% in January 2025 following the rebasing exercise. The continued disinflation trend since then has been aided by base effects and improvements in domestic supply conditions.
Monetary Policy Outlook
The consistent moderation in headline inflation could provide the Central Bank of Nigeria (CBN) with room to ease its tight monetary policy stance. Market observers suggest that the CBN may consider reducing the Monetary Policy Rate (MPR) in the coming quarters to stimulate credit growth and investment.
However, monetary authorities remain cautious. Persistent risks such as exchange rate volatility, energy costs, and insecurity in food-producing regions could still reverse the inflation gains if not managed carefully.
Socioeconomic Impact
For millions of Nigerians, easing inflation offers some respite but not full recovery. Food remains the dominant expense for most households, and even small price increases in essential items can erode purchasing power.
Despite improvements, humanitarian agencies warn that over 30 million Nigerians continue to face acute food insecurity. Rising production costs, transportation bottlenecks, and climate challenges continue to strain food availability and affordability.
In many northern states, worsening food access has led to an increase in malnutrition cases among children and other vulnerable groups. The government’s social protection measures, including agricultural grants and subsidized food distribution, have provided partial relief but remain insufficient to cover the national demand.
Forward Outlook
- Inflation to Ease Further: Economists expect headline inflation to decline closer to 17.8% by November 2025, supported by continued base effects and stable commodity supplies.
- Food Prices to Stabilize Gradually: The harvest season is expected to further moderate food prices, though insecurity and transport costs could still limit full benefits.
- Policy Support Needed: Sustained disinflation will require coordinated efforts across monetary, fiscal, and agricultural policies to address structural bottlenecks.
- Exchange Rate Stability Crucial: Ongoing efforts to stabilize the naira remain critical to ensuring imported inflation does not rise again.
