At 14.45%, Nigeria’s Inflation Falls Below Budget Estimate for First Time in Six Years
Nigeria has recorded a significant macroeconomic milestone as headline inflation eased to 14.45 percent in November 2025, marking the first time in six years that inflation has fallen below the Federal Government’s budget benchmark.
The development represents a major turnaround after years of sustained price pressures that eroded household incomes, weakened consumer confidence, and complicated fiscal planning.
The latest figure aligns closely with the 15 percent inflation target set by President Bola Tinubu for the end of 2025 and reinforces the credibility of assumptions underpinning the country’s ₦27.5 trillion “Budget of Restoration.”
For policymakers, investors, and households alike, the data signals that the economy may finally be emerging from its prolonged inflationary cycle.
Nigeria’s inflation and the government’s budget expectations
Nigeria’s 2025 budget was built on a deliberate attempt to restore macroeconomic stability after inflation surged above 34 percent in late 2024, driven by subsidy removal, currency volatility, and supply-side disruptions.
The government projected inflation would moderate to between 15 and 16 percent, alongside improvements in exchange rate stability and modest economic growth.
The November inflation reading of 14.45 percent not only beats that projection but also represents a symbolic shift in economic momentum.
Analysts note that this is the first time since 2019 that Nigeria’s inflation has dropped below the government’s budget benchmark, easing pressure on public finances and reducing the risk of revenue shortfalls driven by weaker consumption.
President Tinubu had repeatedly underscored inflation control as a central objective of his economic reform agenda.
He announced the 15 percent target during the presentation of the 2025 Appropriation Bill to the National Assembly in December 2024 and reaffirmed it in his New Year address, describing price stability as essential to restoring purchasing power and investor confidence.
Statistical rebasing versus real economic relief
While the headline figure has attracted optimism, economists caution that the decline in Nigeria’s inflation reflects both statistical adjustments and real economic factors.
Earlier in 2025, the National Bureau of Statistics (NBS) rebased the Consumer Price Index (CPI), shifting the base year to 2024 and updating consumption weights to better reflect current spending patterns.
That rebasing exercise resulted in a sharp statistical reset, with inflation dropping from about 34.8 percent in December 2024 to 24.48 percent in January 2025.
However, Ayo Teriba, chief executive officer of Economic Associates, explained that the continued moderation in inflation since then goes beyond rebasing effects.
According to him, the latest easing reflects a lagged impact of improved supply conditions and tighter macroeconomic management, rather than just changes in methodology.
He noted that inflation typically responds with a delay to policy shifts, adding that recent data suggests price pressures are gradually adjusting downward after remaining elevated for more than five years.
Food prices drive the slowdown
A major contributor to the decline in Nigeria’s inflation has been a sustained moderation in food prices, which account for more than half of the CPI basket.
According to the November data, food inflation slowed to 11.08 percent, down from 13.12 percent in October, marking the fifth consecutive monthly decline.
Analysts at Meristem attributed the trend to the lingering impact of the harvest season, which boosted supply across key agricultural commodities.
Prices of staples such as maize, sorghum, paddy rice, and soybean recorded broad-based declines, easing pressure on household food budgets.
The moderation in food inflation is particularly significant in Nigeria, where food costs are the primary driver of headline inflation and a major determinant of living standards for low- and middle-income households.
Currency stability supports disinflation
Another critical factor supporting the slowdown in Nigeria’s inflation has been relative stability in the foreign exchange market.
During November, the naira appreciated by 1.45 percent month-on-month, averaging ₦1,443.85 per dollar, compared to ₦1,465.04 per dollar in October.
This marginal strengthening helped dampen imported inflation, particularly for fuel-related inputs, pharmaceuticals, and manufactured goods that rely heavily on foreign exchange.
Currency stability also reduced speculative pricing behaviour, which had previously amplified inflationary pressures across multiple sectors.
Core inflation, which excludes volatile food and energy prices, also eased to 18.04 percent in November from 18.69 percent in October, suggesting that underlying price pressures are gradually softening across the broader economy.
What this means for households and businesses
For Nigerian households, the decline in inflation offers cautious relief rather than immediate comfort.
While price increases are slowing, the cost of living remains significantly higher than it was two years ago, and wages have yet to fully adjust to past inflation shocks.
Businesses, however, may benefit more directly from the trend.
Lower inflation reduces uncertainty, improves planning, and could ease borrowing costs if monetary conditions eventually follow suit.
Manufacturers and retailers are expected to see improved demand if consumer purchasing power stabilises further.
Outlook: Single-digit inflation in sight?
Looking ahead, economists remain cautiously optimistic.
Teriba projects that Nigeria’s inflation could slow to single digits by January 2026, supported by base effects, sustained food supply, and the post-festive moderation in demand following the “Detty December” spending surge.
Still, analysts warn that risks remain, including potential currency volatility, energy supply disruptions, and security challenges affecting agricultural production.
Sustaining the disinflation trend will depend on consistent policy implementation, fiscal discipline, and continued improvements in supply chains.
For now, the November inflation figure stands as a notable achievement, suggesting that Nigeria’s long battle with runaway inflation may finally be turning a corner.
