As Nigeria approaches the 300th meeting of the Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC) scheduled for May 19-20, fresh inflation data places the bank’s firm monetary stance under the spotlight.
Although a slight decline in inflation offers some relief, it is generally expected that the CBN will maintain its high Monetary Policy Rate (MPR) of 27.5%, a level not seen in decades.
Economists argue that the CBN’s tight monetary policies have only had limited impact on Nigeria’s stubborn cost-push inflation. The main drivers—high fuel prices, ongoing insecurity disrupting supply chains, and heavy dependence on imports—are structural problems that monetary tools alone cannot fix.
In recent months, business leaders and trade unions have urged the CBN to reconsider its policy approach due to concerns over a tightening credit environment and rising input costs that are strangling local businesses and slowing economic growth.
While some speculate the MPC might pause or slightly ease rates, the broader economic conditions suggest monetary tightening will continue for now.
Inflation Eases but Living Costs Remain High
In April 2025, Nigeria’s headline inflation rate dipped slightly to 23.71% from 24.23% in March, according to the National Bureau of Statistics (NBS). Food inflation also eased, dropping to 21.26% from 21.79%.
The NBS credited the slowdown in food prices to reduced costs of staples like maize flour, wheat grain, dried okro, yam flour, soybeans, rice, and various beans.
Despite this, the overall Consumer Price Index (CPI) rose to 119.52 in April, marking a 2.18-point increase from the previous month. This indicates that while price increases may have slowed, the cost of goods and services continues to climb.
Year-on-year, headline inflation dropped by nearly 10 percentage points compared to April 2024’s 33.69%. Food inflation also fell significantly by 19.27 percentage points.
However, analysts caution that recent changes in the CPI’s base year—from November 2009 to a more recent reference period—make it difficult to interpret the full extent of this decline. The World Bank’s May 2025 Nigeria Development Update echoed these concerns, warning that inflationary pressures remain elevated and sustained monetary policy efforts are needed to re-anchor inflation expectations.
High Living Costs Persist Despite Statistical Easing
Though monthly food inflation declined slightly in April, many Nigerians continue to face severe hardships caused by high prices, especially for essential foods.
For most households, affording a balanced meal remains a distant goal, largely reserved for wealthier Nigerians. This reality persists despite various fiscal and monetary attempts to cool inflation.
Fundamental structural issues—including insecurity disrupting farming regions, limited access to affordable credit for farmers and small businesses, poor infrastructure, and other economic vulnerabilities—continue to tighten the squeeze on everyday Nigerians.
Market surveys reveal a wide gap between official inflation data and the prices consumers experience. Traders and shoppers report staple food prices remain prohibitively expensive.
A report by SEID, a voluntary development NGO, found that nearly half of Nigerian households spend their entire income on food, leaving no funds for critical needs such as education and healthcare.
Manufacturing Sector Under Pressure
Nigeria’s manufacturing industry, a key driver of growth and employment, is struggling under rising production costs. Higher prices for imported raw materials and energy have eroded profitability, causing consumer demand to collapse as purchasing power weakens.
The Manufacturers Association of Nigeria (MAN) disclosed that unsold finished goods surged by 87.5% in the second half of 2024, reaching a staggering N2.14 trillion.
Energy costs are a major pain point; MAN reported a 42.3% rise in spending on alternative energy in that period, climbing to N1.11 trillion from N781.68 billion in 2023. These escalating expenses squeeze margins further and push prices upward for consumers.
Inflation Uneven Across Regions
Inflation rates vary widely across Nigeria, worsening the cost-of-living crisis. Despite the marginal national decline reported by the NBS, ten states plus the Federal Capital Territory (FCT) recorded inflation above 30% in April 2025.
Urban inflation, representing price trends in cities where most Nigerians live, remained high at 24.29% year-on-year. Though month-on-month urban inflation eased to 1.18% from 3.96%, the overall burden is still significant. Rural inflation, slightly lower at 22.83%, remains a heavy strain for households.
State-level data highlight the disparities: Enugu led with 36.0% year-on-year inflation and a 12.3% monthly rise, followed by Kebbi with 35.1% and a 5.4% increase. Niger experienced a 14.7% monthly jump, reaching 34.8% yearly inflation.
Benue State, known as Nigeria’s food basket, faced alarming food inflation at 51.8% year-on-year and a 25.6% monthly spike, largely due to persistent insecurity disrupting agriculture. Its overall inflation rate hit 34.3%, with a 12.8% monthly rise.
Other states exceeding 30% inflation include Ekiti, Nassarawa, Zamfara, Delta, Gombe, Sokoto, and the FCT, underscoring the widespread nature of the inflation crisis.
Expert Insights and Recommendations
Johnson Chukwu, Group MD/CEO of Cowry Asset Management, noted that while food inflation slowed to 21.26%, core inflation remains the main upward pressure, outpacing food price growth.
Chukwu warned against interpreting the slower inflation as deflation, emphasizing prices are still rising, just more gradually.
He attributed some easing to seasonal factors, such as the onset of planting season, which temporarily boosts food supply. However, this reprieve is likely short-lived, with prices expected to rise again as the farming season advances.
He stressed urgent government action to tackle the root causes of inflation, especially food price pressures.
Chukwu recommended intensified efforts to improve domestic food production by addressing insecurity—particularly banditry and violence—in key agricultural zones of North Central, North East, and North West Nigeria. Restoring security would enable farmers to resume cultivation and increase output, easing food prices.
He further urged policies to boost local production, stabilize the Naira, and reduce dependence on imports vulnerable to exchange rate shocks. Strengthening foreign reserves is also vital to cushion the local economy from global economic fluctuations.
