Onome Amuge
Inflation cooled for the sixth consecutive month in October 2025, as the headline rate dropped to 16.05 per cent offering policymakers fresh hope that Africa’s fourth largest economy may finally be pulling away from the worrisome price hike triggered by the sweeping 2023–2024 macroeconomic reforms.
Yet behind the encouraging headline, analysts caution that the disinflation narrative remains fragile. Persistent structural pressures, from logistics bottlenecks and elevated transport costs to deep-seated supply chain disruptions, continue to distort pricing across key sectors of the economy, raising doubts about how durable the recent moderation in inflation can be.
The National Bureau of Statistics (NBS) reported on Monday that October’s inflation rate fell from 18.02 per cent in September, beating market projections and marking its lowest level since 2022. At first glance, the data indicates that President Bola Tinubu’s administration is beginning to reap the benefits of a more orderly foreign-exchange market and improved monetary coordination between the central bank and the finance ministry. The decline also owes something to favourable base effects following the CPI rebasing carried out earlier this year.
However, investors operating in Nigeria, from consumer-goods manufacturers to logistics companies and agribusiness exporters, say the inflation picture is less reassuring when examined month by month. Month-on-month inflation rose to 0.93 per cent in October, up from 0.72 per cent in September, indicating that while annual pressures are cooling, real-time pricing remains unstable.
Much of the volatility stems from the food basket, the single largest component of Nigeria’s consumer index. Though year-on-year food inflation eased to 13.12 per cent from 16.87 per cent, the monthly numbers reversed course, climbing 0.37 per cent after a 1.57 per cent decline in September. Everyday staples such as onions, citrus fruits, local vegetables (ugu, okazi), groundnuts and assorted meat cuts were among the biggest drivers.
For multinational food processors and Nigerian FMCG companies, the month-on-month swings have reinforced concerns about the fragility of domestic supply chains. “The seasonal patterns are predictable, but the volatility created by logistics constraints and insecurity in key farm belts is much harder to manage,” said the director of a Lagos-based packaged foods firm.
The October data also exposed a familiar tension, showing that even as food and core inflation eased on an annual basis, service-related prices remained elevated. Monthly increases were particularly pronounced in restaurants and accommodation (2.07 per cent), transportation (1.71 per cent) and housing utilities (1.35 per cent).
Core inflation, excluding food and energy, fell to 18.69 per cent year-on-year, down from 28.37 per cent in October 2024,a substantial improvement. But month-on-month core inflation barely moved, inching down from 1.417 per cent to 1.416 per cent, further evidence that the structural drivers of domestic services inflation remain intact.
One of the more striking revelations of the NBS dataset is the widening difference in inflation across Nigerian states. In August 2025, headline inflation reached 20.14 per cent in Ekiti, 18.97 per cent in Nasarawa, and 18.81 per cent in Zamfara (states that have battled varying degrees of insecurity, inconsistent harvests and transport disruptions).
Meanwhile, Bauchi (9.99 per cent), Anambra (11.72 per cent), and Gombe (11.73 per cent) recorded the lowest price increases, creating an unusually wide gap between the highest and lowest inflation states.
The divergence is more severe in food inflation. Ogun, Nasarawa and Ekiti saw the fastest year-on-year food price increases, while Akwa Ibom, Katsina and Yobe posted much milder rises. Month-on-month, Bauchi, Abuja, and Niger experienced the sharpest spikes, while states such as Katsina, Oyo and Taraba enjoyed outright declines, largely attributed to favourable harvest inflows or improved market access.
Energy prices less influential than perceived
Despite heightened public anxiety over fluctuating petrol and diesel prices, the NBS report notes that energy inflation’s direct effect on headline CPI remains limited due to its relatively low weighting in the index. While energy costs feed into transportation and industrial production, their immediate pass-through to consumer prices is less direct than in many other emerging markets.
This statistical reality dampens the headline impact of global oil price shifts and domestic pump price adjustments, though businesses that rely on diesel generators for power generation argue that the weighting understates the practical economic burden.
Meanwhile, since the Central Bank of Nigeria’s Monetary Policy Committee (MPC) began its rate-cutting cycle in September, markets have been increasingly confident that another cut is imminent. Nigerian treasury yields have softened slightly in anticipation, and analysts now widely expect a 50 basis-point reduction at the next meeting.
With economic growth still sluggish and real consumer incomes under strain, the MPC faces pressure to continue easing. But the rise in month-on-month inflation complicates its calculus. The Committee’s challenge is to support economic activity without risking a resurgence of inflation, especially in a country still adjusting to multiple structural realignments following FX liberalisation and subsidy reforms.
While Cowry Research projects that inflation will fall further to around 15.52 per cent in November 2025, economists remain divided over the credibility of the trend. The optimistic argument cites exchange-rate stability, improved food supply, and favourable base effects as tailwinds. The more cautious view emphasises Nigeria’s infrastructure deficits, unpredictable agricultural output, transport cost volatility, and persistent insecurity.
For global investors, the October report has done little to resolve the larger question, being whether Nigeria’s reform-driven disinflation can ultimately translate into stable, broad-based economic relief, or whether it risks becoming another statistical victory unsupported by improvements in everyday market conditions.
