Nigeria’s Inflation Rate Drops Further to 18.02% as Food, Energy Prices Ease

Nigeria’s inflation rate slowed for the third consecutive month in September 2025, falling to 18.02 percent from 18.56 percent recorded in August, according to the latest data released by the National Bureau of Statistics (NBS). The decline, though marginal, has been described by economists as a welcome development, suggesting that ongoing monetary and fiscal policy measures may be gradually yielding results.

The NBS report showed that both headline and core inflation figures recorded slight decreases, driven largely by moderation in food and energy prices across major urban and rural centers. Month-on-month inflation also eased, indicating a relative slowdown in the rate at which prices are increasing compared to previous months.

Analysts attributed the improvement to a combination of factors, including improved food supply following the harvest season, stability in the foreign exchange market, and declining global crude oil prices, which have reduced transportation and production costs. The Central Bank of Nigeria’s (CBN) sustained tightening of monetary policy, aimed at controlling excess liquidity and stabilizing the naira, also contributed to the easing of inflationary pressures.

Food inflation, which has been a major driver of the headline rate, fell slightly to 21.54 percent in September from 22.05 percent in August. The report cited declines in the prices of staple items such as maize, yam, rice, and cooking oil, particularly in the northern and middle-belt regions. The onset of the harvest season has boosted the supply of grains and vegetables, reducing food price volatility across local markets.

Core inflation, which excludes the prices of volatile agricultural products, also moderated to 15.48 percent from 15.73 percent in the previous month. This reflected reduced pressure from energy costs, housing, and transport, following improved fuel distribution and gradual stabilization in the downstream oil sector.

Economists have lauded the development as an encouraging signal, although they warned that inflation remains well above the CBN’s target band of 6–9 percent. They emphasized the need for consistent policy coordination to sustain the downward trend, especially as structural issues such as poor infrastructure, logistics costs, and insecurity in food-producing regions continue to exert upward pressure on consumer prices.

According to a senior research analyst at a Lagos-based investment firm, “The latest inflation data shows some relief, but the pace of moderation is still very slow. Nigeria needs to consolidate the progress by ensuring that agricultural productivity improves and that the exchange rate remains stable. Any shocks from global markets or domestic policy slippages could reverse the gains quickly.”

The report also noted that urban inflation declined to 18.44 percent from 18.93 percent, while rural inflation dropped to 17.66 percent from 18.12 percent in August. The moderation in rural inflation was attributed to better access to farmlands and smoother commodity distribution channels, aided by improved security in some previously volatile zones.

Monetary policy experts say the continued drop in inflation may influence the CBN’s decision at its next Monetary Policy Committee (MPC) meeting. Since early 2024, the apex bank has maintained a tight monetary stance, raising the benchmark interest rate multiple times to combat inflation and stabilize the exchange rate.

However, there are growing calls for a more balanced policy approach that also supports growth and job creation. Several economists argue that while monetary tightening has helped tame inflation, it has simultaneously increased borrowing costs for businesses and households, constraining investment and consumer spending.

Despite the progress, some analysts caution that inflationary risks remain. The upcoming festive season, expected increases in electricity tariffs, and potential volatility in global oil prices could trigger renewed price pressures before the end of the year. Additionally, the lingering effects of fuel subsidy removal and exchange rate unification continue to influence import-dependent sectors.

In the medium term, experts believe that the success of the federal government’s economic reform initiatives—especially in agriculture, manufacturing, and energy—will be crucial to achieving sustainable price stability. The ongoing efforts to enhance local food production, support smallholder farmers, and encourage private investment in agribusiness are expected to gradually reduce Nigeria’s dependence on imports and ease cost pressures.

The government has also intensified measures to improve logistics infrastructure, such as road rehabilitation and port efficiency, to lower the cost of transporting goods nationwide. These interventions, combined with stable exchange rate policies and fiscal discipline, are projected to further stabilize prices in the coming quarters.

Meanwhile, business operators and households have expressed cautious optimism, noting that while inflation has eased, the cost of living remains high. Many Nigerians continue to grapple with elevated prices of basic goods and services, eroding purchasing power and increasing pressure on disposable incomes.

The World Bank recently projected that if Nigeria maintains its current policy momentum, inflation could fall below 17 percent by mid-2026. However, the institution warned that sustaining progress will require continued reforms in energy pricing, foreign exchange management, and agricultural value chains.

As Nigeria’s inflation rate eases to its lowest level in nearly a year, stakeholders are hopeful that this trend marks the beginning of broader economic recovery. The challenge, they say, lies in maintaining consistency in both monetary and fiscal policies to ensure that the current relief translates into tangible improvement in living standards for millions of Nigerians.