Onome Amuge

Nigeria’s inflation rate fell to 18.02 per cent in September, marking its first dip below 20 per cent in three years and raising cautious hopes that the government’s painful economic reforms may finally be easing price pressures. But economists warn that the reprieve could prove fragile, given persistent exchange rate instability, high borrowing costs, and structural supply constraints that continue to weigh on Africa’s fourth largest economy.

Data released by the National Bureau of Statistics (NBS) on Wednesday showed that headline inflation eased from 20.12 per cent in August, representing a 2.1 percentage point decline and the sixth consecutive monthly slowdown since April. Year-on-year, the decline was even more pronounced, down by 14.68 points from 32.7 per cent in September 2024.

According to the NBS, the drop was driven by seasonal food supply improvements during the harvest period and a technical revision of Nigeria’s inflation base year to November 2009, which recalibrated the weighting of food and non-food items.

Food inflation, the single biggest contributor to Nigeria’s price growth, dropped to 16.87 per cent in September, from 21.87 per cent in August. The NBS attributed the fall to a decline in the prices of key staples, including maize, beans, millet, garri, potatoes, eggs, tomatoes and peppers.

“The food inflation rate in September 2025 was 16.87 per cent on a year-on-year basis, 20.9 percentage points lower than the rate recorded in September 2024,” the statistics office said. Month-on-month, food prices actually contracted by 1.57 per cent, indicating that supply briefly outpaced demand in September.This unusual month-on-month decline, analysts say, is largely seasonal and tied to improved agricultural output during the post-harvest period, as well as better logistics access in parts of the north following improved security in food-producing regions.

The NBS was quick to note that the moderation in inflation was partly technical, following the base-year revision. By changing the base year for the Consumer Price Index to November 2009, the weights assigned to categories such as housing, transport and communication were adjusted, effectively reducing the relative impact of food price increases on the overall index.

For President Bola Tinubu, whose market-oriented reforms have been both lauded and criticised, the latest inflation data represent a rare piece of good news. His administration’s removal of the fuel subsidy and unification of the exchange rate last year triggered a spike in living costs and provoked public discontent.

The government insists that the pain is temporary and that the reforms will ultimately stabilise the economy, attract foreign investment, and reduce fiscal leakages.

Despite the overall moderation, inflation remains uneven across Nigeria’s 36 states. The NBS data showed that Ekiti (28.68%), Rivers (24.18%), and Nasarawa (22.74%) recorded the highest food inflation rates, reflecting higher transport costs and tighter food supply chains. By contrast, Bauchi (2.81%), Niger (8.38%), and Anambra (8.41%) recorded the lowest increases, aided by proximity to food production hubs.

Market reaction and outlook

Nigeria’s bond market reacted positively to the inflation data, with yields easing slightly across short-term maturities. Equity investors also welcomed the report, seeing potential for lower borrowing costs ahead.

However, global investors remain cautious. “Inflation coming down is positive, but Nigeria’s macro story is still clouded by policy uncertainty and external imbalances,” said a Lagos-based portfolio manager at a European investment firm.

Analysts at Coronation Research expect headline inflation to average around 17.5 per cent in the fourth quarter before edging lower in early 2026, assuming no major FX or energy shocks. They note that the ongoing harvest season and a gradual pickup in domestic production could further moderate prices, though base effects will likely fade by year-end.

The easing inflation numbers may mark a turning point, but for millions of Nigerians facing real income erosion, the macro data remain abstract. The average urban worker continues to face soaring transport fares, high rent, and stagnant wages.

“Even with inflation at 18 per cent, many families have lost half their purchasing power in two years. We don’t feel any relief yet. Food may be cheaper in the village, but transport costs cancel the difference,”said Ngozi Okoro, a market trader in Lagos.