Nigeria’s inflation rate declined for the second consecutive month in February as efforts to slow doing costs of living have started materialising.
The latest data from the National Bureau of Statistics (NBS) show that the Consumer Price Index, which measures the inflation rate in an economy, rose 23.2% year-on-year, down from 24.5% recorded in January.
The moderation in inflation has sparked optimism that price growth may have peaked while the slowdown could provide an avenue for policymakers to reassess economic strategies aimed at controlling costs and stabilizing the naira.
Slowing Inflation and Economic Adjustments
It is imperative to note that the downward trend was a result of an adjustment in inflation methodology implemented in February for the first time in 16 years.
On a month-on-month basis, the inflation rate increased by 2% in February on the back of rising food prices, transportation and rent.
Analysts suggest that while inflation remains high, the recent moderation could signal a gradual return to price stability, particularly if external pressures such as currency volatility and supply chain disruptions continue to ease.
Implications for Monetary Policy
The slowing inflation trend will be a key factor when the Central Bank of Nigeria (CBN) convenes its next Monetary Policy Committee (MPC) meeting in May.
Last month, the apex bank maintained its benchmark interest rate at 27.5% to better assess the current situation in relation to global happenings.
However, others structural factors like energy costs, exchange rate fluctuations and food supply constraints are also responsible for the high inflation and need to be addressed to moderate costs.
Cautious Optimism Among Businesses and Consumers
While the latest data provide some relief, businesses and consumers remain cautious about the overall economic outlook. Rising costs of imported goods, transportation and utilities continue to strain household budgets despite inflation showing signs of moderation.
A financial analyst noted that Nigeria’s inflationary pressures are still far from over but the slowdown, if sustained, could ease pressure on lending rates, business operations and purchasing power over time.
“If this trend continues, it could mark the beginning of a more stable inflationary environment, which would be beneficial for businesses planning long-term investments and for consumers facing cost-of-living challenges,” the analyst stated.
Looking Ahead: Will the Trend Hold?
Exchange rate stability, fiscal discipline, and external economic conditions will play critical roles in determining whether inflation can be contained in the months ahead.
For now, the decline in inflation to 23.2% offers a glimmer of hope, but sustained improvements will depend on how effectively Nigeria manages currency volatility, strengthens domestic production, and controls supply-side inflationary pressures.
