Nigeria’s inflation rate decreased to 23.18% in February 2025, marking its first decline this year due to lower petrol costs and a stable naira. Diesel prices dropped significantly, positively affecting consumers. Analysts warn that inflation may rise again starting in April, with a projected average inflation of 31% for the year. The MPC held interest rates steady at 27.50%.
In February 2025, Nigeria experienced a slowdown in its headline inflation rate, marking the first decrease of the year. Following a Consumer Price Index (CPI) rebase, the inflation rate was reported at 23.18%, a reduction from January’s rate of 24.48%, according to the National Bureau of Statistics. This decline was primarily attributed to lower petrol costs and the stability of the naira.
The increased output from the Dangote Refinery contributed to this decline in diesel and petrol prices, benefiting the economy. Diesel prices fell by 33% to ₦1,000 per liter, and petrol prices remained relatively stable at above ₦800 per liter. Additionally, food inflation decreased to 23.51% in February from 24.08% in January, indicating a positive impact on consumers.
Analysts suggest that Nigeria’s inflation rate is at a crucial turning point, particularly following the CPI rebase. They anticipate that inflation may rise again starting in April, with predictions that the Central Bank of Nigeria (CBN) may not meet its inflation targets due to various global economic factors.
Basil Abia, co-founder of Veriv Africa, expressed his perspective on the situation, stating, “My outlook for 2025 in Nigeria in spite of the rebasing is an average rate of 31% for the year. So, expect worse monthly numbers deep into 2025.” He highlighted that these challenges are largely attributable to global economic conditions, drawing parallels with the pandemic’s impact on Nigeria’s economy in 2020.
In February, the Monetary Policy Committee (MPC) opted to maintain interest rates at 27.50%, considering the recent macroeconomic landscape, which includes exchange rate stability and a gradual decrease in fuel price increases alongside the CPI index rebase.
In summary, Nigeria’s inflation rate shows signs of slowing down as of February 2025, driven by stable fuel prices and a robust naira. However, analysts warn that global economic challenges may lead to rising inflation later in the year, potentially impacting the Central Bank’s objectives. Policymakers must navigate these complexities while maintaining economic stability in the face of external pressures.
Original Source: techcabal.com
