Nigeria’s headline inflation rate eased for the fifth consecutive month in August 2025, dropping to 20.12% from 21.88% in July, according to the latest figures released Monday by the National Bureau of Statistics (NBS).
On a month-on-month basis, headline inflation stood at 0.74% in August, reflecting a moderation compared to previous months. The NBS explained that this means the rate of increase in the average price level was lower in August than in July.
“This shows that the Headline inflation rate (year-on-year basis) decreased in August 2025 compared to the same month in the preceding year (i.e., August 2024), though with a different base year, November 2009 = 100,” the agency stated.
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The percentage change in the average Consumer Price Index (CPI) for the twelve months ending August 2025 over the previous twelve-month period was 24.66%, showing a 6.6% decrease compared to 31.26% recorded in August 2024.
Urban vs Rural Inflation
Urban inflation in August 2025 stood at 19.75% year-on-year, down sharply from 34.58% in August 2024. On a month-to-month basis, it slowed to 0.49%, compared to 1.86% in July. The twelve-month urban inflation average came in at 25.81%, down from 33.44% in August 2024.
Rural inflation also showed relief, dropping to 20.28% year-on-year, compared to 29.95% in August 2024. On a monthly basis, rural inflation moderated to 1.38%, from 2.30% in July. Its twelve-month average fell to 23.07%, down from 29.32% in August 2024.
Food Inflation
Food inflation, which has been the most painful for households, slowed to 21.87% year-on-year in August 2025, compared to a staggering 37.52% in August 2024. The NBS attributed the decline partly to base-year changes but also to easing prices of staples such as imported and local rice, sorghum, millet, maize flour, semolina, and soya milk.
Month-to-month food inflation was 1.65% in August, down from 3.12% in July. The average annual food inflation stood at 25.75%, lower than the 36.99% recorded in August 2024.
Core Inflation
Core inflation, which excludes volatile agricultural products and energy, declined to 20.33% in August 2025 year-on-year, from 27.58% in August 2024. However, on a month-to-month basis, core inflation picked up to 1.43% from 0.97% in July.
The twelve-month average core inflation rate was 23.04%, down from 25.18% in August 2024.
However, Nigerians say that despite easing inflation on paper, prices of essential goods remain painfully high. This backdrop, coupled with questions surrounding the credibility of the NBS data, has made it difficult for many to believe that the inflation rate has been in decline.
Economists have expressed concern that unless structural challenges such as power shortages, logistics bottlenecks, and import dependency are addressed, the benefits of lower inflation and interest rates may not reach households or small businesses.
What This Should Mean for MPR
The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has already hinted at future interest rate cuts if the trend continues. Speaking at the European Business Chamber (Eurocham Nigeria) C-Level Forum in Lagos, Cardoso pointed to easing inflation and more efficient capital allocation as reasons to expect downward pressure on lending rates, currently hovering between 32% and 36% on commercial loans.
At its 301st Monetary Policy Committee (MPC) meeting in July, the CBN maintained the Monetary Policy Rate (MPR) at 27.5%, signaling caution despite improving macroeconomic indicators.
But with inflation now falling for five consecutive months, expectations are mounting that the central bank will be compelled to loosen monetary policy. Business leaders and economists have warned that high borrowing costs are stifling growth, discouraging investment, and pushing small and medium-sized enterprises—seen as engines of job creation—into distress.
Some analysts suggest that if the downward trend in inflation persists, the CBN could reduce rates as early as the first quarter of 2026. A rate cut would ease financing costs for businesses and potentially revive the sluggish manufacturing and industrial sectors. Lower rates could also stimulate consumer spending, helping boost growth.