Nigeria’s inflation rate eases for the third straight month, settling at 22.22%

Nigeria’s inflation rate has recorded a third consecutive month of decline, easing to 22.22% in June, offering a glimpse of relief for millions of households grappling with soaring living costs. Though the rate remains historically high, the steady downtrend has spurred cautious optimism among economists, businesses, and policymakers that inflation may have peaked and could be poised for further moderation.

The National Bureau of Statistics (NBS) reported that the Consumer Price Index (CPI)-based inflation slowed from 22.41% in May to 22.22% last month. Food inflation, the most volatile component impacting poorer households, also decelerated—dropping from 24.7% in May to approximately 24.2% in June. Core inflation, which excludes volatile items like food and fuel, edged down slightly as well, reflecting early signs that higher prices could be stabilizing.

Analysts attribute the easing momentum to a confluence of factors. Following the removal of fuel subsidies last year and the unification of foreign exchange rates, the Nigerian economy is now responding to a tighter monetary policy. The Central Bank of Nigeria (CBN) has maintained high benchmark interest rates to dampen inflation and reduce demand pressures. Monetary authorities and key segments of the commercial banking sector have also tightened credit conditions, influencing consumption and investment decisions.

However, improved domestic food supply and stabilization in global commodity prices are thought to have contributed most significantly. The increase in agricultural output—particularly staples such as rice, maize, and vegetables—has softened food inflation pressures. Farmers have also benefited from improved access to fertilisers, seeds, and micro-credit lines, supporting higher yields.

Former government subsidies for farm inputs, alongside greater mechanisation and private investment in agriculture, have helped raise production volumes. Storage and logistics solutions have also eased distribution bottlenecks that had previously inflated prices. The NBS data revealed that month-on-month food price increases have moderated compared to earlier in the year.

Despite the slowdown, inflation remains a formidable economic challenge. At over 22%, it significantly exceeds global and regional averages—most central banks in sub-Saharan Africa target rates closer to single digits. The high rate continues to erode purchasing power, particularly among lower- and middle-income Nigerians, for whom food, transportation, and utility costs account for a major portion of disposable income.

On the streets, consumers are beginning to report small wins. A Lagos market trader noted that while vegetable prices remain elevated, they no longer spike weekly as before. “I’m selling tomatoes and peppers for slightly less than a month ago,” he said. “Some customers who left have returned.” In Abuja, residents observed that transport fares appeared steadier, with drivers citing only occasional increases in fuel and spare-part costs.

Local businesses have echoed these observations, pointing to marginal improvements in operating conditions. Manufacturers, who have been heavily impacted by high input and energy costs, reported stabilizing production expenses. One industrialist commented that while price levels were still high, the absence of monthly inflation jumps provided some buffer for planning and budgeting. Small retailers have also begun offering fixed-price promotions and loyalty discounts to cushion consumers.

Nevertheless, experts emphasise that maintaining the cooling trend may hinge on several risks. One key variable is the stability of forex markets and foreign exchange reserves. Although the unification of the naira’s official and parallel market rates has narrowed, volatility remains. Renewed currency pressures could quickly stoke inflation, particularly for imported goods and petrol. Another uncertainty lies in global commodity markets—any sudden rise in fuel, grain, or fertiliser prices could disrupt domestic stability.

Security disruptions in farming regions—due to banditry and insurgency—also pose food inflation threats, as harvests are disrupted and supply chains impeded. Infrastructure challenges, such as poor roads, electricity shortfalls, and port delays, remain structural bottlenecks that continue to compel high transport and logistics costs.

Analysts have urged that monetary policy be complemented by clear fiscal and structural actions. They recommend targeted stimulus in food production, investment in renewable energy to reduce the cost of power, and transport upgrades to reduce logistics expenses. Emphasis on value-addition in agriculture and manufacturing, along with implementation of trade policy frameworks supporting local content, may help buttress the inflation gains.

CBN policymakers have hinted at possible future interest rate cuts if inflation persists at current levels. Communication from the bank emphasized that any decision would be data-driven, ensuring risks of inflation resurgence are contained. Market watchers believe rate cuts will only occur once inflation consistently falls below 20% and remains on a clear downward trajectory.

The government has signalled an intent to link subsidy support and social intervention programmes more distinctly to inflation dynamics. The social safety nets established in the post-subsidy era are being monitored closely to ensure essential goods remain affordable, particularly for the most vulnerable.

Inflation expectations—both consumer and business sentiment—are among the next hurdles. Surveys will test whether households and enterprises believe that inflation is truly moderating or simply stabilizing at high levels. If consumers expect further price increases, spending will stay low and costs remain entrenched.

President Bola Tinubu and his economic team have welcomed the data cautiously. In a statement, the Presidency noted steady inflation reduction as “encouraging and indicative of policy traction,” but emphasised the need for continued discipline, targeted fiscal support, and structural acceleration to restore price stability.

As Nigeria heads into the second half of the year, sustaining the trend will require coordination across fiscal, monetary, and regulatory domains. If policymakers can build on the current momentum, inflation may gradually decline toward the 15–17% range by year-end—a level still high, but more recoverable. Yet contained inflation alone will not ensure living standards rise; sustained improvements in economic growth, job creation, and infrastructure delivery will be essential.

In the coming weeks, markets will closely monitor monthly inflation releases, naira stability, CBN pronouncements, and fiscal updates. For now, the 22.22% mark provides a positive inflection point—a symbolic step away from crisis. Continued momentum, however modest, may determine whether Nigeria’s inflation curve finds its tipping point.