Nigeria’s headline inflation rate slowed to 20.12 percent year-on-year in August 2025, marking a continued decline from 21.88 percent in July, according to the National Bureau of Statistics (NBS) data.
Analysts at FBNQuest attributed the moderation to softer energy prices and improved stability in the foreign exchange market, supported by sustained FX liquidity.
The Central Bank of Nigeria’s (CBN) ongoing monetary tightening measures and moderate expansion in credit allocation were also credited with helping ease demand-side pressures.
The naira, which has struggled for much of the year, recorded its strongest performance in seven months.
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Data from the CBN showed the currency strengthened to ₦1,506.08/$1 at the Nigerian Foreign Exchange Market (NFEM) on Wednesday, buoyed by a $4.1 billion rise in foreign reserves between July and August.
The last time the naira reached similar levels was March 5, 2025, when it closed at ₦1,500.80/$1.
On a month-on-month basis, inflation eased to 0.74 percent in August, down sharply from 1.99 percent in July.
However, price pressures remain elevated, particularly in the food sector.
Despite a reported drop in food inflation to 21.87 percent, analysts warn that persistent security challenges across key farming regions continue to disrupt supply chains and could slow further disinflation.
The recent inflation trend, combined with a stronger naira and rising reserves, signals cautious optimism for Nigeria’s economy.
Yet, analysts note that sustaining the momentum will depend on consistent FX inflows, energy market stability, and effective management of insecurity in agricultural hubs.
Image Credit: Nigerian Tribune
