Nigeria’s inflation rate eased sharply in October 2025, with headline inflation falling to 16.05% from 18.02% in September, marking one of the steepest month-to-month drops in recent years.
But beneath the surface, the celebratory tone around the data is unraveling. As more analysts dig into the numbers, questions about their reliability are gaining as much traction as the inflation slowdown itself.
The National Bureau of Statistics (NBS), which released the data on Monday, reported a year-on-year inflation rate of 17.82%, far below the 33.88% recorded in October 2024. The Bureau stressed that the improvement reflected the adoption of a new base year (November 2009) following its recent rebasing exercise.
On a month-on-month basis, headline inflation rose to 0.93% in October, up from 0.72% in September, indicating a faster pace of price increases across the economy compared to the previous month.
Urban and Rural Price Movements
The NBS reported that urban inflation stood at 15.65% in October 2025, representing a 20.73-percentage-point decline from 36.38% a year earlier. Urban inflation rose month-on-month to 1.14%, up from 0.74% in September. The twelve-month average urban inflation rate fell to 22.68%, down from 34.52% in October 2024.
Rural inflation printed at 15.86% year-on-year, down from 31.59% in October 2024. Month-on-month, rural inflation slowed to 0.45% from 0.67% in September. The twelve-month average rural inflation rate declined to 20.81%, compared to 30.24% last year.
Food Prices Ease Year-on-Year but Tick Up Monthly
Food inflation dropped dramatically to 13.12% year-on-year, a 26.04-percentage-point fall from 39.16% in October 2024. The Bureau attributed this large fall to the base-year adjustment introduced during rebasing.
Month-on-month food inflation improved to -0.37% in October, up from -1.57% in September. According to the NBS, price increases in fresh onions, oranges, pineapples, shrimp, unshelled groundnuts, vegetables such as ugu and okazi leaf, and meats including goat meat, cow tail, and liver drove the upswing.
The average annual food inflation rate for the twelve months ending October 2025 was 21.96%, down from 38.12% in October 2024.
Analysts have attributed the recent decline in the cost of food to the food import window, approved earlier this year by the federal government. Besides the moderating food prices, analysts note that improved foreign-exchange conditions and relatively stable energy costs supported the October slowdown.
But as market observers processed the report, a different story began taking shape — one that questions the credibility of the inflation numbers themselves.
Growing Scrutiny Over NBS Data
What should have been a landmark month for inflation relief is now at the center of one of the biggest statistical credibility debates Nigeria has seen in years.
The controversy gained traction because financial markets barely responded to the steep drop in inflation — a glaring red flag in any inflation-targeting environment.
Economist Kelvin Emmanuel pointed it out, saying: “I have to tell you that this is the first time in my life I will see that the statistics office is announcing that the inflation rate has dropped to 16.05% but the yield curve differential is not responding,” he said.
He argued that the Central Bank’s refusal to cut the Monetary Policy Rate (MPR) — despite a headline inflation reading that would normally justify such a move — exposes a deeper problem.
“The Central Bank’s monetary policy committee has refused to adjust the inflation to interest yield curve by cutting MPR to align. There’s no policy transmission that keeps your yield curve differential at 11%, especially because your mechanism is inflation targeting.”
He explained that “Inflation to interest yield curve should typically not be more than 400 basis points, so when you’re justifying such a divergence with leading and lagging indicator of money markets, you’re abdicating the role of the MPC to the vagaries of the markets.”
Against this backdrop, many believe that the reason the MPC has refused to cut the rates to align is because they don’t trust the numbers NBS is putting out, especially because of the weighting of the basket.
Concerns about NBS data did not begin in October. Since the bureau introduced its new rebased inflation basket, analysts have repeatedly questioned the figures — especially following changes to weightings.
The most sensitive change was the reduction of food weighting from about 60% to 50.8% and the reduction of energy from around 20% before merging rent, water, gas, and petrol into a broader 15.8% category.
“Oh yes, the rebasing figures are political because how can you move food from 60% to 50.8% and then energy from 20% and then group it under one basket of 5 major items like water, household rent, gas, petrol at 15.8%?
“The reduction in energy and food is the reason they are arriving at this distorted rate — and that is not a clear reflection of reality on the ground,” Emmanuel added.
Even with some declines in commodity prices, some analysts argue that Nigeria’s current economic conditions do not resemble a country with 16% inflation. To illustrate the mismatch, they point to 2021, when inflation stood at 16.95% — noting that it had far lower food prices, although fuel subsidy was still in place.
Market Reaction—or Lack of It—Tells Its Own Story
The financial system’s lack of response to the new inflation figures has become one of the strongest indicators that investors, lenders, and policymakers doubt the numbers.
Analysts have noted that under a credible inflation-targeting regime, a drop to 16% inflation would normally trigger:
• lower yields
• an MPR cut
• increased lending appetite
• adjustments across short-term money-market instruments
But as none of these are expected to occur as the yield curve remained unchanged, and the CBN left interest rates untouched, investors are expected to stay cautious.
Some analysts believe this silence is louder than any policy statement.
