Nigeria's Inflation Cools For Second Month After CPI Rebase
TLDR
- Nigeria’s annual headline inflation eased to 23.18% in February, marking a decline from 31.7% a year earlier
- The drop followed a rebase of the Consumer Price Index (CPI), reflecting changes in consumption patterns
- The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) maintained the interest rate at 27.5% after six hikes in 2024
Nigeria’s annual headline inflation eased to 23.18% in February, marking a decline from 31.7% a year earlier, according to data released by the National Bureau of Statistics (NBS). The drop followed a rebase of the Consumer Price Index (CPI), reflecting changes in consumption patterns.
Inflation was down 1.3 percentage points from January’s rate of 24.48%. Food inflation, a significant driver of overall inflation, stood at 23.51% in February, compared to 26.08% in January. The drop marks the first significant slowdown since the NBS rebased the CPI, setting 2024 as the new base year instead of 2009.
This change led to a sharp decline in inflation from 34.80% in December to 24.48% in January, the largest drop in over a decade. The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) maintained the interest rate at 27.5% after six hikes in 2024, citing the easing of inflationary pressures.
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Key Takeaways
The decline in diesel and petrol prices contributed to easing inflation. Diesel prices dropped by 33%, from around ₦1,500/liter to ₦1,000/liter, largely due to increased production from the Dangote Refinery. This cascaded effect on the broader economy, lowering costs for consumers and businesses. Petrol prices, however, remained relatively stable at ₦800/liter. The slowdown in fuel prices helped reduce transportation and production costs, lowering the pressure on food prices and overall inflation. Despite these improvements, analysts warn that inflation could accelerate again starting in April due to global economic factors. Some predict an average inflation rate of 31% for 2025, citing external pressures, similar to the economic impact of the 2020 pandemic on Nigeria.
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