Nigerian economists and the Centre for the Promotion of Private Enterprise have explained that the two consecutive drops in Nigeria’s inflation rate signal that the country’s economy is recovering from hardship

The Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Muda Yusuf, the CEO of SD & D Capital Management, Gbolade Idakolo, and a Don at Lead City University in Ibadan, Prof. Godwin Oyedokun, disclosed this on Monday.

They spoke in reaction to Nigeria’s February 2025 inflation drop.

On Monday, Nigeria’s inflation lowered for the second time to 23.18 percent in February 2025 from 24.48 percent recorded in the previous month, according to the National Bureau of Statistics’ latest Consumer Price Index.

The data showed that food inflation also declined in February to 23.51 percent from 26.08 percent in January.

Nigeria’s inflation fell massively to 24.48 percent in January after CPI rebasing.

However, while the data from NBS showed the inflation rate is lowering, the cost of living in Nigeria has remained elevated.

Nigeria’s deceleration in inflation shows macro stability — CPPE

The deceleration in the inflation rate can be attributed to moderation in macro stability, according to CPPE.

Yusuf stressed that the drop in exchange rate volatility and drop in premium motor spirit prices are contributing factors to the decline in Nigeria’s inflation rate.

He, however, emphasised that Nigeria’s inflation remains high, noting that the government needs to come up with policies to bring down the prices of basic items, such as staple foods and pharmaceuticals.

“The further deceleration in inflation in February can be attributed to two factors. First is the base effect.

When you relate the 2025 figure to 2024, it is expected to see further narrowing because the inflation rate is mainly year on year.

This trend is likely to continue for the larger part of 2025. The second part is due to moderation in macro stability. We are beginning to drop in the volatility in the exchange rate in the last few months.

“This is a key factor because the exchange rate is a major driver of inflation. Also, slight reduction in energy prices such as PMS.“

However, the inflation rate of 23.18 percent is still high. This means that there is a lot of work to be done to ease inflationary pressures on citizens.

The government should take some urgent steps to bring down the price of basic products. Foods, pharmaceutical products, cooking gas, and staple foods (bread, noodles, rice)- should be top on the agenda of government.

“Another good news is that there is an increase in food production on account of improved security,”.

Pressures driving higher prices are easing — Prof Oyedokun

Oyedotun said the latest inflation drop suggests that the factor driving higher prices may be stabilising, which could provide relief to consumers and businesses.

According to him, the second consecutive drop in headline and food inflation, with figures at 23.18% and 23.51%, respectively, could be viewed as a positive indicator of an easing inflationary trend.

He said this suggests that the pressure driving prices higher may be stabilising, which could provide some relief to consumers and businesses.

He noted further that improved supply chain conditions, seasonal factors that affect food production and prices, government interventions, and monetary policies are factors contributing to the inflation rate decline.

Regarding the February inflation drop outside the Consumer Price Index (CPI) rebasing, several factors could contribute.

“These might include improved supply chain conditions, seasonal factors that affect food production and prices, or government interventions that stabilise markets.“

Additionally, any recent policy measures aimed at curbing inflation, such as adjustments in interest rates or subsidies for essential goods, could also play a role,” he said.

On why the inflation drop has not been reflected in market prices, he said, “As for the inflation figures not aligning with the reality of elevated prices for goods, this discrepancy could stem from various reasons.“

The CPI may not fully capture specific categories of goods that are experiencing sharp price increases.

Additionally, inflation measurements are often averages and may not reflect localised price changes or the unique purchasing patterns of different consumers.

“Factors such as producer price increases, distribution costs, and market dynamics can also lead to a situation where prices remain high despite a reported decline in inflation rates”.

Why inflation rate decline doesn’t reflect on the price drop — Idakolo

Idakolo said Nigeria’s inflation figures do not reflect the general price of goods because of the strength of the naira- exchange rates and interest have remained high.

“The inflation figures are not generally reflecting on the price of goods because certain fundamentals of the economy, like the strength of the Naira, exchange rate, and interest rates, remain high, which have made it difficult for the impact of lower inflation to be felt by the people.

However, if the government continues to drive down prices due to targeted policies, it would only be a matter of time before people start feeling the impact of reduced inflation on the economy,”.