Amanze Chinonye
Nigeria’s inflation slowed for the fifth straight month in August 2025, with headline inflation easing to 20.12% from 21.88% in July, according to new data from the National Bureau of Statistics (NBS).
The 176-basis-point drop signals a meaningful turnaround for an economy that has battled stubbornly high prices since 2023.
Inflation Cools Across Major Categories
Food inflation a key driver of household spending fell to 21.87% in August from 22.74% in July. Core inflation, which strips out volatile items such as food and energy, also eased to 20.33%, down from 21.33%. Analysts attribute the moderation to increased commodity supply from the harvest season and a steadier naira, both of which have helped slow price increases across the economy.
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On a month-on-month basis, headline inflation slowed sharply to 0.74% in August from 1.99% in July, while food inflation dropped to 1.65% from 3.12%. However, core inflation rose slightly to 1.43% from 0.97%, highlighting persistent cost pressures in housing, transport, and restaurant services categories that are less affected by seasonal food supplies.
Big Year-on-Year Decline Brings Relief
Compared with August 2024, headline inflation dropped by 12.03 percentage points, food inflation plunged by 15.65 points, and core inflation fell by 7.25 points. Part of this is due to the rebasing of the CPI to a 2024 base year, which raises the statistical base. Yet the consistent monthly slowdown indicates a genuine improvement in price stability beyond technical effects.
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Naira Stability Supports Price Moderation
The naira traded steadily between ₦1,530 and ₦1,540 to the U.S. dollar in August, supported by improved foreign inflows and exchange rate unification. Analysts say this stability has anchored inflation expectations and reduced opportunities for arbitrage, creating a more predictable environment for businesses and investors.
Policy Shift Likely as MPC Meets
With inflation easing and the currency holding firm, the Central Bank of Nigeria’s Monetary Policy Committee (MPC) is expected to cut interest rates by 25 basis points at its September 22–23 meeting the first cut of 2025. Lower borrowing costs would help stimulate economic activity and support domestic demand.
Harvest Season to Sustain Easing
Analysts forecast further declines in headline and food inflation as the harvest season deepens, boosting food supply and keeping transport costs stable. Core inflation is also expected to soften if the naira remains steady and global oil prices stay within their current range.
Nigeria’s August inflation report signals that the worst of the price crisis may be over. Falling inflation strengthens consumer purchasing power, encourages private investment, and gives the Central Bank room to support growth after years of aggressive tightening.
While core inflation remains slightly sticky in services such as housing and transport, the broader trend points to a more stable economic environment good news for households struggling with high living costs, businesses planning investments, and policymakers looking to balance growth with price stability.
Amanze Chinonye is a Staff Correspondent at Prime Business Africa, a rising star in the literary world, weaving captivating stories that transport readers to the vibrant landscapes of Nigeria and the rest of Africa. With a unique voice that blends with the newspaper's tradition and style, Chinonye's writing is a masterful exploration of the human condition, delving into themes of identity, culture, and social justice. Through her words, Chinonye paints vivid portraits of everyday African life, from the bustling markets of Nigeria's Lagos to the quiet villages of South Africa's countryside . With a keen eye for detail and a deep understanding of the complexities of Nigerian society, Chinonye's writing is both a testament to the country's rich cultural heritage and a powerful call to action for a brighter future. As a writer, Chinonye is a true storyteller, using her dexterity to educate, inspire, and uplift readers around the world.
