Nigeria’s Inflation Drop: A Testament to Policy Reforms and Resilience
There are encouraging clues of recovery within Nigeria’s economy due to headline inflation having
dropped significantly from 34.80% in December 2024 to 24.48% year on year in January 2025.
This announcement, made by the National Bureau of Statistics (NBS), was corroborated by Prince
Adeyemi Adeniran, the Federation’s Statistician-General, during a Press briefing in Abuja. He
further explained that the decline is due to certain policy actions as well as rebasing of the
Consumer Price Index (CPI). This goes to show how badly the country needed this step towards
improvement, and it will be rewarding in the long battle of economic recovery. It’s a welcome
notification, especially saying that not too long ago everyone surely had the sensation of their
pockets leaving empty.
The CPI, as a measure of change in the price level of goods and services purchased by households,
has been rebased to more accurately capture current spending patterns of consumers. The change,
which is the first one since 2009, enables Nigeria to cross the inflation measurement bridge and
integrate with the rest of the global economy. And how! The 2009 world was a different place to
live in and head inflation was expected in most parts, unlike now. Everything during that time just
made sense, but it is comforting to see the numbers have started accounting for the ground realities.
With CPI rebasing, the true inflationary and consumption patterns of Nigerians can be understood more accurately which depicts the state of the economy.
In particular, urban inflation decreased to 26.09% as rural inflation dipped to 22.15%. The more critical food inflation figure for the economy
came down to 26.08% from 39.84% in December 2024. Core inflation came in at 22.59%, in which
inflationary impacts from agriculture and energy are not captured. The World Bank, International
Monetary Fund (IMF) and the Central Bank of Nigeria (CBN) have given support for this process
of rebasing which has aided in the effectiveness of the inflation data in using the economy’s
contemporary situations.
These fuel reforms are the reason behind the dip in inflation, which is not is perplexing as it might
seem, considering the strategic policies formulated by President Bola Ahmed Tinubu. Since he
assumed office, the President has put in place drastic steps in the efforts to stabilize the economy,
like fuel subsidy removals and naira devaluation. The dramatic impact these measures will bring
is nothing but painful for the instant. People selling kunu and riding okadas are feeling the hard
knock. In the end it will all be worth it, and hopefully we are approaching a favorable era.
The promise from President Tinubu with respect to enhancing local production and aiding local
farmers is quite refreshing. Nigerians should, and must, be able to grow and produce everything
that we consume. Just think about it, garri and rice can actually become cheaper! And those
agriculture zones have to be protected. Farmers need to be able to go to their farms without any
concerns for their safety. These policies are already showing strong positive effects for the country.
In a recent presidential media chat, President Tinubu also reiterated his government’s target to cut
inflation to 15% by the end of 2025. Among other things, the strategy consists of increasing local
production to help lower imports, providing farmers with low interest loans and better security in
farming areas, and cutting the budget to shift spending priorities to social services like education
and health. Along with these policies, together with the commitments from the CBN of maintaining price stability and the inflation targeting policy, this will ensure long term economic sustainability.
The rebasing of the 2009 inflation target and historical CPI data to 2024 value will help deal with
inflation for the next ten years. The switching from 2009 to 2024 allows for a better picture. This
method enables the boosting of overall economic experience without worrying about accurately
gauging the rate of inflation. The increasing the base year for reference allows setting a more
realistic benchmark for the period of time in question zero.
Prince Adeyemi Adeniran pointed out that the rebasing exercise does not imply a reduction in the
prices of goods and services but rather a lower rate of inflation.2 This particular point is critical
for assessing the effect of government actions on inflation.
This positive movement has also boosted international investors confidence. trust is further
demonstrated by the surge of over $48 billion in Nigeria’s foreign reserves. The confidence was
also reflected in the oversubscription of government bonds which showed faith in the country’s economic recovery.
According to Razia Khan, Chief Economist, Africa and the Middle East at Standard Chartered, the reduced inflation could open doors for a cut in interest rate by the CBN as there has been considerable progress in achieving local economic stability. Despite these improvements there is work still to do. However, the food inflation is less than earlier, is still challenging. Don’t turn blind eye to those who are still struggling to feed themselves and their families. Persistent insecurity in farming regions along with flooding and the impact on crops being produced all pose serious threats to food security.
Furthermore, the differences between state budgets, especially when the governors choose to spend
on their offices instead of generating income for the states, like that babarigas, will definitely
subvert the efforts of the federal government. They need to do better! In order to fully implement
the reforms and ensure there is maximum utility among all Nigerians, effort must be made by both
state and local governments to synchronize their policies with the overarching objectives of the
federal government. We need everybody working together, abeg. This is not just a federal issue, it
is a Nigerian issue and therefore everyone has a responsibility. Achieving a dribble down effect
will be possible through reduced unproductive expenditure, increased accountability, and a focus
on essential services such as education.
The Accountability Group appeals to every Nigerian to help the government by embracing
patriotism and not engaging in activities like hoarding and speculation that worsen inflation and go against their national obligation. Weaved into the Gren-hoarding story of Kano is a moral that reminds us of the folly of such greed; the lesson is for every one of us. Greed and hoarding only
hurt us in the end. As President Tinubu stated, “We are re-engineering, our revenue is getting better, and we are taking our sovereignty and our respect back around the world. Whatever is happening to us, we have to solve it by ourselves.”
The reduction in the inflation rate confirms both the strength of the Nigerian economy and the
results of President Tinubu’s policies. There are still some issues, but the groundwork for ongoing
development has been put into place. If all levels of government remain committed and citizens
are actively engaged, Nigeria can reverse its decline and take up its rightful place as one of the
leading economies in Africa. There is guarded optimism. Just perhaps, we are getting it right.
International investors are pouring back in, our forex is healthy, the CBN might lower interest
rates? That is positive. We need to get out our flags and support our country rather than criticize
it. So, let’s continue to work hard, believe in each other, and push for progress. Is a new Nigeria attainable? Yes. We can achieve that lofty goal if we keep this resolve in mind as we work wholeheartedly towards it. While it is good to celebrate goals achieved, we should work harder to seek out unity in building a nation where all Nigerians prosper.
