Onome Amuge
Nigeria’s headline inflation eased to 15.15 per cent in December 2025, according to the latest Consumer Price Index (CPI) report from the National Bureau of Statistics (NBS), offering relief to households and businesses that have been facing sustained price pressures over the past year. Analysts, however, caution that the apparent slowdown masks persistent structural inflation, particularly in core components such as housing, transport, and services, which continue to place pressure on consumer spending.
The December CPI figures mark the first full month under the NBS’s recently rebased index, which now uses 2024 as the base year and 2023 as the weight reference period. This methodological revision, aimed at aligning Nigeria’s inflation measurements with international best practice, reshaped headline and sub-index readings, including a recalculation of November inflation from 14.45 percent to 17.33 percent.
“The December 2025 year-on-year headline inflation rate, including all other sub-indices, was obtained through the maximisation of the index reference period. This differs from the single-month index reference, where December 2024 was set to 100. The new approach smooths out short-term base effects and provides a more accurate reflection of long-term price trends,” explained Adeyemi Adeniran, statistician-general of the federation and CEO of the NBS.
Headline deceleration driven by food prices
The CPI rose to 131.2 points in December from 130.5 points in November, a 0.7-point increase that translated into a monthly headline inflation of 0.54 per cent, down from 1.22 per cent in November. On a year-on-year basis, the moderation from 17.33 per cent in November and 34.80 percent in December 2024 reflects both the methodological recalibration and easing short-term food price pressures.
Food and non-alcoholic beverages remained the largest contributors to headline inflation, adding 6.06 percentage points to the December year-on-year figure. However, the food sub-index recorded a monthly decline of 0.36 per cent, marking a reversal from November’s 1.13 percent increase. Staples such as tomatoes, garri, eggs, potatoes, carrots, millet, vegetables, plantain, beans, wheat grain, ground pepper, and fresh onions all registered lower prices, reflecting seasonal supply adjustments and improvements in domestic distribution.
Despite this, the 12-month average food inflation remained elevated at 22 per cent, reflecting the lingering cost pressures faced by households across the country. Restaurants and accommodation services contributed 1.96 percentage points to the headline rate, transport 1.62 points, and housing, water, electricity, gas, and other fuels added 1.28 points.
Core inflation, which excludes volatile agricultural produce and energy, remained high at 18.63 per cent year-on-year, although it moderated from November’s 19.28 per cent. Month-on-month, core inflation eased to 0.58 per cent from 1.28 percent in November, signaling some relief for sectors less affected by agricultural price swings. Analysts note that sustained core inflation at nearly 19 per cent underscores the structural nature of price pressures in services, utilities, and transport, which are less responsive to seasonal changes.
Urban vs rural trends reveal uneven price pressures
Regional analysis shows divergent inflation experiences for urban and rural consumers. Urban inflation stood at 14.85 per cent year-on-year, slightly higher than the rural rate of 14.56 per cent. Month-on-month, urban prices edged up 0.99 per cent, while rural inflation fell 0.55 per cent, reflecting more stable rural food markets and seasonal agricultural availability. The disparity indicates that urban households, which spend a higher share of their income on transport, services, and energy, continue to experience higher cost-of-living pressures.
State-level variations further showcase the uneven nature of inflationary pressures. Abia recorded the highest year-on-year headline inflation at 19.03 per cent, followed by Ogun (18.80 per cent) and Katsina (18.66 per cent), while Sokoto (8.61 per cent), Plateau (9.05 per cent), and Kaduna (10.38 per cent) experienced the lowest increases. Month-on-month, Cross River (3.11 per cent), Abia (2.63 per cent), and Delta (2.53 per cent) recorded the largest increases, while Ondo (-3.74 per cent), Gombe (-3.02 per cent), and Jigawa (-1.96 per cent) saw declines.
Food inflation mirrored these patterns. Year-on-year food prices increased fastest in Yobe (15.25 per cent), Ogun (14.12 per cent), and Abuja (13.24 per cent), while Akwa Ibom (4.34 per cent), Sokoto (4.62 per cent), and Plateau (6.19 per cent) experienced the slowest rises. Month-on-month, food inflation rose in Imo (3.19 per cent), Nasarawa (3.16 per cent), and Yobe (1.18 per cent), but declined in Plateau (-2.76 per cent), Rivers (-2.50 per cent), and Zamfara (-1.93 per cent).
The NBS cautioned against direct interstate comparisons, noting that differences in consumption patterns and CPI weights across states can make comparisons misleading. This warning underscores the complexity of inflation dynamics in Nigeria, where household expenditure patterns vary significantly between urban and rural areas, and across states.
Methodological shift key to understanding the data
The rebasing of the CPI to 2024, with a 12-month reference period, fundamentally changes the interpretation of inflation trends. Under the previous single-month base approach, December inflation would have appeared artificially high due to base effects, rather than genuine price increases. According to the NBS, the new methodology aligns with international standards and allows policymakers, investors, and businesses to monitor inflation trends more accurately over time.
The NBS also revised November’s headline inflation upward to 17.33 per cent from 14.45 per cent.
Energy prices and core inflation remain critical challenges
While headline inflation has moderated, energy prices increased in December by 2.74 per cent, reinforcing persistent structural inflationary pressures. Core inflation, which excludes volatile agricultural produce and energy, remains high at 18.63 per cent, highlighting that price pressures are not solely food-driven. Urban households, in particular, face ongoing cost pressures from rent, electricity, fuel, and transport, suggesting that consumer purchasing power remains under strain despite headline moderation.
Policy implications: Monetary, fiscal, and supply-side considerations
The December CPI figures carry important implications for policymakers. The moderation in headline inflation provides the Central Bank of Nigeria (CBN) with some flexibility in monetary policy. However, the persistence of elevated core inflation indicates that the CBN cannot rely on interest rate adjustments alone to sustain price stability. Economists argue that complementary fiscal and supply-side interventions are essential, including investments in domestic agriculture, targeted subsidies for essential commodities, and improvements in transport and distribution networks.
Financial markets will also watch the inflation trajectory closely. Bond yields, equities, and the naira exchange rate remain sensitive to both headline and core inflation trends, as well as anticipated policy responses from the CBN. Energy prices, in particular, could influence inflation expectations and monetary policy decisions in 2026.
Households and businesses face mixed realities
For Nigerian households, the December moderation in food prices offers temporary relief, particularly for lower-income families that spend a significant share of their income on essentials. However, urban consumers continue to face higher prices for transport, energy, and services, eroding disposable incomes. Businesses, especially in the consumer goods and services sectors, are facing fluctuating input costs and changing consumption patterns across regions, making pricing and inventory strategies more complex.
Meanwhile, the state-level disparities in inflation highlight the challenge of designing policies that address both national trends and localised pressures. While residents in Abia, Ogun, and Katsina face high inflationary pressures, those in Sokoto, Plateau, and Kaduna experience more moderate price increases. According to analysts, policymakers must balance nationwide interventions with targeted measures to ensure equitable economic outcomes.
