Nigeria’s headline inflation rate eased to 22.97% in May 2025, marking a second consecutive month of decline, according to the latest data from the National Bureau of Statistics (NBS).
The new figure, down from April’s 23.71%, points to a gradual cooling of inflationary pressures, though many Nigerians still say the impact has yet to be felt in household expenses.
The annual inflation rate is now 10.98 percentage points lower than the 33.95% recorded in May 2024. This year-on-year decline is partly attributed to the recalibration of the inflation measurement framework, as the NBS now uses November 2009 as the new base year. On a monthly basis, inflation slowed to 1.53% in May, down from 1.86% in April, suggesting a reduced pace in the general price level increase.
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Urban-Rural Divide Persists
Despite the overall slowdown, the disaggregated data reveals contrasting inflationary trends across Nigeria’s urban and rural communities. Urban inflation stood at 23.14% in May, a sharp drop from 36.34% in the same month last year. But on a monthly basis, urban prices ticked upward, rising to 1.40% from 1.18% in April.
Rural areas fared better month-on-month, with inflation dropping significantly to 1.83% in May from 3.56% in April. The rural year-on-year inflation rate stood at 22.70%, down from 31.82% in May 2024. Yet, the cost of living in rural Nigeria remains high, and analysts say security challenges and poor infrastructure continue to undercut efforts at easing inflation further in those regions.
Food Inflation Drops Sharply—But Not for Everyone
Food inflation dropped dramatically to 21.14% in May 2025 from 40.66% in May 2024, one of the largest year-on-year declines in recent years. However, this sharp fall is largely the result of statistical adjustments rather than tangible relief in the markets. On a monthly basis, food inflation actually increased slightly to 2.19% in May from 2.06% in April, driven by slower declines in the prices of staples such as yam, maize flour, sweet potatoes, and fresh pepper.
NBS attributed the month-on-month uptick to reduced momentum in food price reductions, as insecurity in food-producing regions and early-season flooding have started to disrupt supply chains again.
Core Inflation Also Eases
Core inflation, which excludes volatile agricultural items and energy prices, fell to 22.28% in May from 23.39% in April. Compared to the 27.04% recorded in May 2024, core inflation has now dropped by 4.76 percentage points. This easing reflects relatively stable pricing in housing, transport, and communication services, though rising utility costs in urban areas remain a concern.
Financial analysts had projected the May inflation slowdown, crediting improved macroeconomic conditions. Damilare Asimiyu, Head of Research at Afrinvest West Africa, said, “The naira appreciation in the NAFEM window helped ease import-driven inflation. We’re also seeing early gains from the government’s fiscal interventions, particularly in reducing logistics costs.”
According to Nairametrics Research, three factors were central to the slowdown:
- Exchange Rate Gains: The naira appreciated slightly by 1.03% in the NAFEM window to N1,585.50/$ in May, helping to ease pressure on the costs of imported goods.
- Lower Fuel Prices: Reduced petrol costs contributed to declining transport and logistics expenses, particularly for food, thereby softening inflation in retail and wholesale markets.
- Seasonal Harvest and Food Supply: Temporary improvements in food distribution helped moderate prices in major cities like Abuja and Lagos. However, this gain may not last as early flooding and persistent insecurity in key agricultural states threaten future supply.
Nigerians Still Waiting to Feel the Relief
While the headline numbers suggest relief, the reality for many Nigerians remains starkly different. Despite the deceleration, prices are still far higher than what the average household can afford. Food accounts for more than 50% of household expenditure in Nigeria, and even small monthly increases weigh heavily on already strained incomes.
The back-to-back easing in inflation has also sparked renewed calls among economists for the Central Bank of Nigeria (CBN) to consider reducing the Monetary Policy Rate (MPR), which currently stands at a historic high of 26.25%.
Some analysts believe that maintaining high interest rates amid declining inflation is unnecessary and potentially harmful to credit availability in the economy.
“The CBN must now balance its inflation-targeting mandate with the need to support real sector growth. If inflation continues to ease, we expect a downward adjustment in the MPR within the next policy cycle,” Asimiyu said.
However, the concern is now shifting to whether this inflation trend holds through the third quarter, especially as climatic conditions, global energy prices, and domestic insecurity continue to pose major risks.