Nigeria’s headline inflation has dropped for the fifth straight month, putting fresh pressure on the Central Bank of Nigeria (CBN) to lower interest rates and give businesses and households some relief.

Latest data from the National Bureau of Statistics (NBS) shows that the country’s inflation rate eased to 20.12% in August 2025, down from 21.88% in July. This marks a 1.76% month-on-month decline and signals a gradual cooling of prices after months of record highs.

Year-on-year, inflation also fell sharply compared to 32.15% in August 2024, partly due to the Consumer Price Index (CPI) rebase earlier this year, which helped capture a more accurate picture of price changes.

Food inflation often the biggest driver of Nigeria’s headline figure also dipped slightly to 21.87% from 21.88% in July, thanks to lower prices of staples like imported and local rice, maize, millet, semolina, and flour.

Calls for Interest Rate Cut

The sustained decline has renewed calls for the CBN’s Monetary Policy Committee (MPC) to ease its benchmark interest rate, which currently stands at 27.50%.

In July, the CBN had opted to maintain its tight stance despite appeals from manufacturers, businesses, and economists who argued that high rates were hurting production and worsening unemployment.

Financial expert and CEO of SD & D Capital Management, Gbolade Idakolo, told DAILY POST that the August figures could force the CBN to act when the MPC meets again on September 22–23, 2025.

“The easing of inflation could make the CBN cut interest rates at the next MPC meeting,” Idakolo said.

“High interest rates have limited the benefits of falling inflation for ordinary Nigerians. A rate cut would relieve pressure on the real sector and bring down the cost of goods and services.”

Skepticism About Real Impact

Despite the positive numbers, some experts say the benefits are yet to trickle down to the average Nigerian.

Prof. Godwin Oyedokun of Lead City University, Ibadan, noted that a lower inflation rate only matters if it reflects in everyday prices and household budgets.

“Many Nigerians still feel no difference because food prices, transport costs, and other essentials remain high,” he explained.

“The gains will only be meaningful if they are sustained and lead to improved purchasing power and a lower cost of living.”

Analysts also warn that exchange rate volatility, insecurity in food-producing regions, and high energy costs could quickly reverse the trend if not addressed.

Why This Matters

With five consecutive months of easing inflation, Nigeria appears to be on a slow path to price stability. However, without a reduction in interest rates and a stronger push to support local production, the impact may remain muted.

All eyes will now be on the CBN’s MPC meeting later this month to see whether the bank will prioritize economic growth by cutting rates or stick to its tight monetary stance to sustain disinflation.