By Victor Ezeja
Despite recording a notable decline in inflation rate, there are concerns that persistent structural issues in the Nigerian economy pose a threat to the gains made.
The headline inflation rate has dropped from 34.80 per cent in December 2024 to 21.88 per cent in July 2025, according to official statistics released by the National Bureau of Statistics (NBS).
According to the latest Consumer Price Index report released by the NBS, the headline inflation declined for the fourth consecutive month (since April 2025), easing from 22.22 per cent in June to 21.88 per cent in July, reflecting a deceleration of 0.34 per cent.
A Sign of Stabilization, But Structural Issues Persist
On a month-on-month basis, food inflation also moderated, falling from 3.25 per cent in June to 3.12 per cent in July, while core inflation posted marginal declines year-on-year (-0.03 per cent) and a sharp month-on-month drop from 3.46 per cent to 0.97 per cent.
These positive figures have created optimism within government circles about the effectiveness of economic policies. However, there are concerns that this statistical improvement has not translated into tangible improvements in the lives of most Nigerians, who continue to grapple with soaring prices for essential goods, diminished purchasing power, and worsening living conditions.
Economic Experts Urge Caution Amid Optimism Over Declining Inflation
Commenting on the latest inflation report, CEO of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, said the positive trend reflects a gradually stabilizing macroeconomic environment, supported by exchange rate stability, improved investor confidence, and the lingering impact of import duty waivers on key staples such as rice, maize, and sorghum.
Yusuf also observed that the base effect, given the high inflationary conditions in 2022, has also been a strong factor in the recent downward trend.
The economic expert, however, stated that despite the gains, there is persistent pressure.
He noted that the month-on-month headline inflation rose from 1.68 per cent in June to 1.99 per cent in July, while year-on-year food inflation increased from 21.97 per cent to 22.74 per cent.
“These movements underscore the continuing vulnerability of the economy to supply-side shocks,” Yusuf stated.
“The July 2025 inflation report provides a basis for cautious optimism. While progress has been made in moderating headline and core inflation, the persistence of food and month-on-month price increases highlights unresolved structural weaknesses.”
The Centre called for caution and sustained reforms to maintain foreign exchange stability, address structural constraints such as high logistics and import costs, insecurity, climate risks, and port inefficiencies that contribute to elevated costs and sustained inflation.
It called for fiscal discipline on the part of the government, ensuring prudent spending and effective management of liquidity injections to prevent fueling inflationary pressures.
It also emphasised the need for a coordinated mix of monetary, fiscal, and structural interventions to consolidate recent gains and steer the economy toward sustained stability.
Chief Economist and Partner at SPM Professionals, Dr Paul Alaje, said the inflation figures depict a reduction in the rate of increase in the average price level, not an actual reduction in prices of commodities in the market.
According to him, the inflation data in the last four months only means that the rate at which prices are increasing is reducing (from 24.48 per cent in January to 21.88 per cent in July).
“These figures do not mean that prices will go down. What the NBS report is saying is that the rate at which it became expensive last year is not the same as the rate at which it became expensive this year,” Alaje stated.
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Pinnacle Daily reports that the NBS rebased the CPI earlier this year, shifting the base year from 2009 to 2024. This technical adjustment significantly altered the inflation landscape, with the headline rate dropping dramatically to 24.48 per cent in January from 34.80 per cent in December 2024 – a decline of 10.32 percentage points in a single month. The rate dropped further to 23.18 per cent in February but rose to 24.23 per cent in March. It has been on a downward trend since April.
The rebasing exercise, conducted with support from the World Bank and the International Monetary Fund (IMF), aimed to provide a more accurate reflection of current consumption patterns by updating the basket of goods and services and their relative weights.
Alaje called for strategic interventions aimed at mitigating the impact of economic hardship faced by Nigerians due to ongoing reforms.
Dr Ebikabowei Aduku, a development economist and lecturer at the University of Africa, Toru-Orua, Bayelsa State, concurred with Alaje, saying that inflation rate reduction does not mean a reduction in prices of commodities.
Aduku urged the government to tackle the drivers of inflation in the country, such as insecurity, high exchange rate, transportation and energy costs, to bring down prices. “fighting inflation with monetary policy or fiscal policy instrument may succeed in reducing the rate at which the prices increase, but will not reduce the price level,” Aduku stated.
Victor Ezeja is a passionate journalist, scholar and analyst of socioeconomic issues in Nigeria and Africa. He is skilled in energy reporting, business and economy, and holds a master's degree in mass communication.
