Nigeria’s inflation rate recorded a significant slowdown in September 2025, dropping to 18.02 percent, according to the latest report released by the National Bureau of Statistics (NBS).
This marks the sixth consecutive month of decline and the first time in three years that inflation has fallen below the 20 percent mark, signaling renewed optimism in the country’s economic outlook.
The continued moderation in Nigeria’s inflation rate reflects the impact of recent policy adjustments, improved currency stability, and a stronger supply of food and energy.
Analysts believe that the easing inflation could pave the way for further monetary policy easing by the Central Bank of Nigeria (CBN) before the end of the year.
NBS Report Shows Significant Drop in Prices
According to the NBS Consumer Price Index (CPI) released on Wednesday, the September headline inflation rate dropped by 2.1 percent from August’s figure of 20.12 percent.
On a year-on-year basis, the rate was 14.68 percent lower than the 32.70 percent recorded in September 2024 — an impressive decline that highlights the government’s progress in stabilizing prices.
The NBS report explained that on a month-to-month basis, the inflation rate stood at 0.72 percent, slightly lower than 0.74 percent in August.
This suggests that the pace of price increases continued to slow across key sectors, particularly in food, transport, and household goods.
The report attributed the decline to a combination of factors including stable energy prices, stronger food supplies, and the rebasing of the CPI, which adjusted the inflation basket to reflect new consumption patterns and market realities.
Food Prices Ease as Agricultural Output Improves
One of the major contributors to the decline in Nigeria’s inflation rate was the easing of food prices.
The food inflation rate fell sharply to 16.87 percent in September, down from 37.77 percent a year earlier.
The bureau noted that the decrease was largely due to a drop in the prices of major staples such as maize, garri, beans, millet, and potatoes.
Analysts say the government’s agricultural intervention programmes, improved logistics, and the gradual recovery of farmlands in previously insecure areas have helped stabilize food production.
On a month-on-month basis, food inflation declined by 1.57 percent, compared to an increase of 1.65 percent in August, showing that households experienced some relief from the persistent food price pressures that have strained consumer spending over the past two years.
Core Inflation and Urban-Rural Trends
Core inflation, which excludes volatile items such as farm produce and energy, stood at 19.53 percent in September, a 7.9 percent drop from 27.43 percent in the same period last year.
This indicates a broader reduction in general price levels beyond the food and energy sectors.
Urban inflation inched slightly upward to 0.74 percent month-on-month, compared to 0.49 percent in August, but remained much lower on a yearly basis at 17.50 percent, down from 35 percent a year earlier.
Rural inflation also eased, falling to 18.26 percent, as stable commodity prices reached more local markets across the country.
At the state level, Adamawa (23.69 percent), Katsina (23.53 percent), and Nasarawa (22.29 percent) recorded the highest year-on-year inflation, while Anambra (9.28 percent), Niger (11.79 percent), and Bauchi (12.36 percent) reported the lowest.
Analysts Predict Further Rate Cuts by CBN
The continued drop in Nigeria’s inflation rate has strengthened investor confidence that the CBN may introduce further rate cuts to stimulate economic growth.
Senior Research Analyst at FXTM, Lukman Otunuga, said, “A combination of softer food prices and a strengthening naira may have tamed price pressures.
Further signs of cooling inflation could pave the way for another benchmark rate cut in November.”
Similarly, analysts at Arthur Steven Asset Management noted that the easing inflation trend supports expectations for a second policy rate reduction before year-end.
“The disinflationary momentum strengthens confidence in a stable macroeconomic environment,” the firm said.
Policy Reforms and Currency Stability Drive Momentum
Experts have attributed the sustained moderation in Nigeria’s inflation rate to a mix of fiscal and monetary policy coordination.
According to AIICO Capital, the government’s policy reforms, including the rebasing of the CPI and proactive energy price management, have played crucial roles in stabilizing inflation.
“The recent appreciation of the naira by 2.9 percent in September — its strongest level in 15 months — contributed significantly to easing import-driven inflation,” the firm said.
AIICO also noted that the CBN’s recent 50-basis-point rate cut to 27 percent in September has encouraged lending activities and improved liquidity in the domestic market.
However, it cautioned that sustained price stability would depend on “policy discipline, strengthened food security, and continued energy stability.”
Outlook: Sustaining the Gains in 2025
With inflation approaching the government’s 15 percent budget benchmark, economists believe Nigeria may be entering a period of sustained macroeconomic recovery.
The challenge, however, will be maintaining consistency in reforms and addressing structural bottlenecks in production and distribution.
As the country heads into the final quarter of 2025, stakeholders are optimistic that the decline in Nigeria’s inflation rate will enhance consumer confidence, stimulate private investment, and create room for more inclusive economic growth.
The coming months will test whether the government’s fiscal prudence and the CBN’s cautious monetary easing can keep inflation under control while fostering long-term stability across the economy.
