Nigeria’s Inflation Slows to 20.12%: Relief on Paper, Pressure in Markets headline inflation slowed for the fifth consecutive month in August, falling to 20.12% from 21.88% in July, according to data released by the National Bureau of Statistics (NBS). The drop of 1.76 percentage points represents the steepest monthly deceleration since February, raising cautious optimism that the country may finally be turning a corner in its long battle against soaring prices.
Food inflation, which has been the most painful driver of hardship for households, also eased to 21.87% year-on-year. On a month-on-month basis, headline inflation stood at 0.74%, while food inflation posted 1.65%. The figures suggest a moderation in price increases — but Nigerians at the market stalls remain skeptical.
Why Inflation is Falling
“August’s decline is significant,” he explained. “We are entering peak harvest season, which runs between September and November. Improved food supply is easing pressure. At the same time, core inflation has benefited from relative stability in the exchange rate compared with last year.”
Indeed, the Central Bank of Nigeria’s efforts to tighten liquidity and stabilize the naira appear to be bearing fruit. Last year’s volatility saw the currency plummet, driving up import costs. By contrast, a more stable foreign exchange environment this year has reduced imported inflation.
Can the Decline Be Sustained?
Seasonal harvests bring only temporary relief, which raises the question: can the disinflation trend last?
Dr. Edumedia is cautiously optimistic. “In the short term, inflation will keep falling because last year’s base was extremely high — around 32% at one point. That level is unlikely to repeat, so mathematically, we’ll continue to see moderation. But for sustained relief, Nigeria must address supply-side constraints: improve agricultural output, keep energy prices stable, and ensure exchange rate stability.”
The Disconnect Nigerians Feel
While the data shows a slowdown, ordinary Nigerians often complain they cannot feel the difference in their daily lives.
This paradox stems from a common misconception. Inflation measures the rate of increase in prices, not whether prices are falling outright.
“As economists, we get this question all the time,” said Edumedia. “People expect inflation falling to mean prices are dropping. That is not the case. Prices are still rising, but at a slower pace. If you bought rice at ₦100 last year, maybe it doubled to ₦200. Now it may be ₦220 instead of ₦250. It’s still higher, but the pace of increase has slowed.”
For households already battered by years of steep increases, this nuance provides little comfort.
The Sticky Problem of Food Inflation
Nigeria’s Inflation Slows to 20.12% Relief on Paper, Pressure in Markets ,Food remains Nigeria’s most sensitive inflation driver. The year-on-year rate fell from January’s 26.08% to 21.87% in August. Yet on a month-on-month basis, food inflation has proven “sticky,” hovering around 1.65% in August after spiking as high as 3% earlier in the year.
Several structural challenges explain this stickiness:
Insecurity: Persistent attacks in farming regions limit agricultural output.
Flooding and climate change: Weather shocks have disrupted harvest cycles.
Logistics and transport costs: High diesel and fuel prices inflate costs of moving food from farms to markets.
Market behavior: Traders resist lowering prices, even when supply improves, preferring to maintain elevated margins.
These factors mean that even during harvest season, Nigerians may not see meaningful drops in market prices.
A Declared “Food Emergency”
President Bola Tinubu declared a “state of emergency on food security” in 2023, promising interventions to lower costs. But responses from farmer associations highlight a mismatch between government intentions and producer realities.
“The presidency wants to see food prices come down,” said Edumedia. “Farmers argue that without addressing high production and transport costs, prices cannot fall. What government likely means is increasing supply through interventions, not directly cutting costs of production.”
Bridging this gap — by reducing transport costs, supporting irrigation, investing in storage, and protecting farmers from insecurity — will be critical if Nigeria is to translate disinflation into lower prices on the ground.
Monetary Policy at a Crossroads
The inflation numbers arrive just as the Monetary Policy Committee (MPC) prepares to meet. Nigeria’s Monetary Policy Rate (MPR) currently stands at 27.5%, compared with Nigeria’s Inflation Slows to 20.12% , creating a rare situation of a positive real rate on paper.
But investors focus less on policy rates and more on actual yields. “The MPR is just a benchmark,” Edumedia noted. “What matters is Treasury bill and bond yields. When those exceed inflation, then we truly have positive real returns.”
This matters because international investors weigh Nigeria’s yields against global alternatives. If U.S. rates decline, as some speculate, Nigerian assets could become more attractive — provided exchange rate risks are managed.
Lessons from the U.S.
Global dynamics complicate Nigeria’s policy choices. In the U.S., inflation has edged up to 2.9%, raising questions about whether the Federal Reserve will cut rates.
“It’s a dicey period for them,” Edumedia observed. “They must choose between taming inflation and supporting growth. For Nigeria, the lesson is clear: we cannot rush into rate cuts while inflation is still high.”
Analysts widely expect the CBN to hold rates steady at its next meeting, with possible cuts deferred until early 2026 if inflation continues its downward path.
Outlook: 15% Target Ambitious but Possible
The federal government has set an ambitious target of 15% inflation by year-end. Edumedia considers this unlikely but believes a figure closer to 17–18% is achievable.
“August’s sharp 1.76% drop shows what is possible,” he said. “With harvests peaking and continued exchange rate stability, we may see another big fall. But 15% is optimistic. Closing around 17–18% would still be a significant achievement.”
Beyond the Numbers: A Nation Still Struggling
Even if inflation moderates, Nigeria’s challenges remain daunting. Years of double-digit inflation have eroded purchasing power, leaving millions of households impoverished. Wage growth lags far behind price increases, and structural problems in agriculture, energy, and logistics keep costs high.
Disinflation is welcome, but it is not deflation. Prices are not coming down — they are simply rising more slowly. For a population weary of endless hikes in the cost of garri, rice, and yams, that distinction may feel academic.
The task before policymakers is to translate the statistics into lived relief, ensuring that households feel not just the slowing pace of inflation but actual improvements in affordability. That will require not only prudent monetary policy but bold structural reforms in food production, distribution, and security.
Conclusion
Nigeria’s inflation Slows to 20.12% down is real, measurable, and significant. The August headline figure marks a five-month trend of disinflation and the steepest monthly decline in years. The harvest season and exchange rate stability are driving the improvement.
But the story is far from finished. Food inflation remains stubborn, Nigerians still feel the pinch at markets, and the sustainability of the trend depends on deep reforms. For the Central Bank, the challenge is balancing rate policy with growth, liquidity, and currency stability.
Whether Nigeria ends 2025 with inflation closer to 15% or 18%, the key question will be whether ordinary citizens feel any relief. If they do not, then the statistics, however impressive, will ring hollow.