Nigeria’s inflation rate declined to 23.18% in February 2025, influenced by stable naira and lower fuel prices. Diesel prices dropped significantly, while petrol remained stable. Analysts forecast further increases in inflation due to global factors, and the CBN maintained interest rates at 27.50%.
In February 2025, Nigeria experienced a slowing of its headline inflation rate for the first time, attributed to stable petrol costs and the naira’s stability. According to the National Bureau of Statistics, the inflation rate decreased to 23.18%, down from January’s 24.48%. The decline in petrol prices, alongside reduced diesel costs due to increased output from Dangote Refinery, contributed to this easing effect on inflation, benefiting both consumers and businesses.
Specifically, diesel prices saw a reduction of 33%, now priced at ₦1,000 per liter, while petrol remained steady, fluctuating around ₦800 per liter. Food inflation also fell to 23.51% in February, a drop from 24.08% in January. Analysts suggest that while this slowing is favorable, inflation may rise again in the coming months, particularly by April, as they predict that the Central Bank of Nigeria (CBN) could struggle to meet its inflation targets due to ongoing global economic pressures.
Basil Abia, co-founder of Veriv Africa, noted that he anticipates an average inflation rate of 31% for all of 2025, asserting that rising monthly numbers may emerge deeper into the year. He emphasized, “It will mostly not be the fault of Nigeria’s policymakers, but rather due to global economic factors, similar to how the pandemic affected Nigeria’s economy in 2020.”
In response to the evolving economic climate, the Monetary Policy Committee (MPC) chose to maintain interest rates at 27.50% in February, considering the recent developments in the macroeconomic landscape, including exchange rate stability and the gradual reduction in fuel prices, as well as adjustments prompted by the CPI rebase.
In conclusion, Nigeria’s inflation rate showed a significant deceleration in February 2025, reflecting stable fuel prices and a strong naira. However, analysts foresee potential challenges ahead due to global economic conditions, suggesting that inflation may accelerate again as the year progresses. The CBN’s current strategy to hold interest rates steady indicates a cautious approach amidst fluctuating economic factors.
Original Source: techcabal.com
