Nigeria’s headline inflation rate eased to 20.12 percent in August 2025, the National Bureau of Statistics said on Monday, marking the fifth consecutive monthly decline and offering the first substantial breathing room for households after a year of punishing price rises. The drop from July’s 21.88 percent is the latest sign that inflationary pressures are moderating across the economy, though prices remain far above pre-crisis levels and millions of Nigerians continue to feel the pinch.
The NBS report showed the Consumer Price Index stood at 126.8 in August, up from 125.9 in July, while month-on-month inflation slowed sharply to 0.74 percent from 1.99 percent the previous month. Those month-to-month numbers indicate that price increases are losing momentum, a trend policymakers will watch closely as they consider the next move for interest rates. Food inflation, the largest component of the basket and the main driver of hardship for ordinary families, also moderated on a monthly basis.
Economists say the disinflation streak is partly technical but also partly real. The NBS revised its base year and re-weighted items in the CPI earlier this year, which changed the arithmetic under some headline calculations and introduced a significant base effect. That overhaul reduced the headline rate compared with last year’s elevated readings, but independent analysts point to improving supply conditions for staples and better foreign exchange stability as substantive contributors to recent moderation. The combined effect has produced the softest inflation reading since mid-2022.
A key near-term factor behind the easing was a slowdown in food price growth. The rate of increase in food costs fell in August, reflecting cheaper prices for imported rice and local cereals as seasonal harvests and improved logistics helped fill markets. Analysts caution that food inflation remains elevated in absolute terms and vulnerable to shocks in transport, exchange rates and crop yields, especially in rural areas where price pressures are still more acute. Policymakers acknowledge that if food prices rebound, headline inflation could quickly reverse course.
Political decisions also played a role this month. The federal government temporarily suspended a controversial four percent Free on Board import levy after sharp backlash from traders and importers, a move designed to limit added cost pressures on goods and to stabilize prices during a delicate recovery. Authorities said the suspension is under review and framed it as part of a suite of measures intended to reduce transaction costs for businesses and ultimately lower retail prices for consumers. Market participants welcomed the pause, but cautioned that underlying fiscal pressures remain.
The disinflation trend strengthens the hand of those in markets calling for a shift in monetary policy. The Central Bank of Nigeria has kept its benchmark interest rate unchanged at 27.5 percent for months as it watched inflation peak and then gradually retreat. With August’s figure trending down, financial markets and some economists are now openly discussing whether the CBN can begin an easing cycle to support growth without re-igniting price pressures. The central bank has signaled it will take a data-dependent approach and monitor food inflation closely.
Reactions from academia and business were measured. Some professors said the headline drop will only matter if it is felt at the household level and if real wages stop eroding. Business groups welcomed the decline and argued that lower inflation would bring relief for manufacturers facing high input costs, but warned that the recovery will be fragile unless the government addresses logistics bottlenecks, power shortages and regulatory uncertainties that push production costs higher. Labour organizations stressed that wage adjustments remain essential to shield the most vulnerable.
Financial markets reacted with caution. The naira has seen relative stability in recent months, a factor that helped blunt the import cost shock that fed inflation last year. Traders said the currency’s calmer path, combined with the temporary suspension of the import levy, eased cost expectations for import-dependent goods and lowered the pricing pass-through to consumers. Still, investors noted that equity and bond markets will remain volatile until a credible, longer-term plan to tackle structural supply constraints is in place.
Despite the optimism, hard realities remain. A headline rate of 20.12 percent is still high by international standards and well above the single-digit targets that central banks in other emerging economies aspire to. Rural households continue to experience higher price growth than urban diners, and food remains the largest risk for price rebounds. Experts say durable disinflation will depend on measures that go beyond temporary fiscal gestures. That includes strengthening food supply chains, protecting gas and power supplies to industry, repairing transport links and ensuring predictable trade and tax policies.
For now, the August reading offers both relief and a warning. It proves that inflation can fall fast when policy, markets and seasonal forces align, but it also underscores how precarious progress can be. Policymakers face the delicate task of converting headline improvements into lasting gains for households without stalling a still fragile growth rebound. The coming months will tell whether 20 percent becomes a turning point or a temporary reprieve.
Samuel Aina