Nigerian inflation has declined for the second consecutive month, with annual consumer prices rising 23.2% in February. Food inflation slowed to 23.5%, while core prices increased to 23%. This trend may influence the Central Bank of Nigeria to pause interest rate hikes in May. Analysts predict inflation will drop below 20% by the end of 2025.
Nigeria’s inflation rate has demonstrated a decline for the second consecutive month, suggesting that price pressures may have peaked. As of February, annual consumer prices increased by 23.2%, down from 24.5% the previous month. Food inflation also decreased to 23.5% from 26.1%, although core price growth rose to 23% from 22.6%.
This downward trend in inflation could lead the Central Bank of Nigeria (CBN) to keep interest rates unchanged during its May meeting. Previously, the CBN paused its tightening measures, maintaining the benchmark rate at 27.5% in March after a series of hikes aimed at managing inflation and stabilizing the naira.
Bloomberg Economics has predicted that Nigerian inflation will continue to decline, forecasting the consumer price index will fall below 20% by the end of 2025. Yvonne Mhango, an economist at Bloomberg Africa, expects that policymakers may begin easing monetary policy in the latter half of 2025.
Recently, the National Bureau of Statistics revised the consumer price index for the first time in 16 years, updating the reference year to 2024 to better reflect inflation pressures on households. This change significantly reduced the weighting of food and non-alcoholic beverages from 51.8% to 40%. The month-on-month headline inflation for February was reported at 2%.
The continuous decline in Nigeria’s inflation rate signals a potential stabilization in the economy. With consumer prices decreasing, there is anticipation for the Central Bank of Nigeria to maintain current interest rates during the next policy meeting. As inflation continues to moderate, economic analysts foresee a positive trajectory for consumer prices moving forward into 2025.
Original Source: financialpost.com
