Bye Bye Inflation?

Obinna Chima

For the first time in many years, inflation figures have been showing signs of moderation, which is a somewhat comforting trend.

According to the National Bureau of Statistics (NBS), the Consumer Price Index (CPI), which reflects the growth rate of prices for goods and services, eased further to 21.88 percent in July, compared to 22.22 percent in the preceding month. 

Year-on-year, headline inflation stood at 33.40 per cent in July 2024, representing 11.52 per cent drop, though using a different base year, of November 2009. 

The CPI figures for July released by the statistical agency last week also showed that, month-on-month, the inflation rate was higher at 1.99 per cent in the period under review compared to 1.68 per cent in June. In July, food inflation dropped to 22.74 per cent, year-on-year, compared to 39.53 per cent. Month-on-month, the food inflation stood at 3.12 per cent, compared to 3.25 per cent in June. The NBS attributed the decrease in the food index to the rate of decrease in the average prices of vegetable oil, beans, local rice, maize flour, guinea corn, wheat flour, and millet whole grain, among others. 

Equally, a recent report by Nairametrics revealed that for the first time in nearly a decade, the country is witnessing a meaningful and sustained slowdown in consumer prices. According to 10-year inflation data as analysed by NairametricsResearch, headline inflation has dropped by 10.7 percent, the sharpest mid-year slowdown in over a decade. The data showed that, unlike 2020 to 2024, when inflation accelerated, 2025 stands out alongside 2017 and 2018 as one of the few disinflationary years.

Inflation, indeed, means different things to different people. To the man on the street, inflation occurs when he spends more money to purchase the same quantity of goods. On the other hand, to an economist, it is the general increase in price level over a period of time. 

Certainly, high inflation distorts consumer behaviour. It also destabilises markets by creating unnecessary shortages. Likewise, high inflation, which is not the desire of any economy, leads to income redistribution and brings about weak purchasing power. That is why central banks globally are never comfortable with a rising inflation rate, usually seen by them as ‘evil.’

For an economy long battered by double-digit inflation driven by food shortages, energy price hikes, exchange rate instability, and policy inconsistencies, this development naturally raises the question many are asking: Is Nigeria finally turning the corner on inflation? 

The answer, however, is not so straightforward. While the numbers may show a downward movement, the daily reality in markets and households across the country suggests otherwise. Tomatoes, rice, tubers of yam, bread, and other staples remain painfully expensive, transport fares continue to consume a disproportionate share of workers’ incomes, and housing costs are as high as ever. 

Nigerians still struggle to cope with the rising cost of living, which suggests that the decline in official inflation figures has yet to translate into real relief for the ordinary citizen. This disconnect between data and daily life is where the real challenge lies, and is what the government and policymakers must focus their attention.

A fall in inflation, it must be noted, does not mean that prices are coming down. Rather, it means they are rising more slowly than before. For Nigerians who have seen prices more than double in the past decade, a moderation in inflation is welcome but insufficient to restore purchasing power. 

However, a sustained downward trend signals that some level of macroeconomic stability is beginning to take root. No doubt, the exchange rate reforms and the hawkish monetary policy stance of the Mr. Olayemi Cardoso-led Central Bank of Nigeria (CBN) contributed to this development. If carefully managed, the trend could mark the beginning of a more stable economic environment.

Still, Nigerians are justified in asking why they do not feel this improvement. One reason for this is that food inflation remains extremely high, and food constitutes the largest share of household spending. Persistent insecurity in farming communities, poor logistics, and weak investment in agricultural infrastructure continue to drive prices upward despite the slowing pace of overall inflation. 

Another reason is the high cost of energy and transportation. The removal of fuel subsidies and an increase in electricity tariffs raised production costs across industries, which in turn pushed consumer prices higher. 

Additionally, while inflation figures may be easing, wages have not kept pace with rising prices, leaving citizens worse off. To many, therefore, the official reports feel detached from their everyday struggles.

It is worthy to note that Nigeria’s inflationary pressures are deeply rooted in structural weaknesses that require long-term solutions. Poor infrastructure, insecurity in food-producing regions, and overdependence on imports, among others, have kept the economy vulnerable. If these issues are not addressed, any current improvement could be temporary, with inflation re-emerging in even more aggressive forms when the next global or domestic shock hits.

The task before the government is to ensure that the declining inflation figures are not just statistical but meaningful. Nigerians must be able to feel it in their pockets. 

To achieve this, the government must focus on food security. It must become a national emergency. It must ensure that it ends insecurity in rural communities so that farmers can return to their fields. Reducing post-harvest losses by investing in storage and logistics would also lower food costs significantly. 

Also, energy costs must be stabilised. Another priority is policy coordination. The CBN cannot fight inflation alone by tightening monetary supply. Fiscal authorities must complement this with prudent spending, targeted subsidies, and investments that expand production.

On the wage front, the government must not shy away from conversations around income adjustments. Real wages are declining sharply, and without measures to boost incomes, Nigerians will not experience relief even if inflation keeps falling. 

Equally important is rebuilding public trust. Nigerians are often skeptical of government statistics, preferring to judge inflation by what they pay in the markets. For reforms to succeed, communication and transparency are crucial. Government agencies must engage citizens and keep explaining what the data means, and ensure that the benefits of macroeconomic policies are not just on paper but visible in real life. 

Only when the price of garri, rice, or fuel drops would people believe that inflation is truly being tamed.

From the foregoing, therefore, the government must see simmering down inflation as an opening to deepen reforms, address structural bottlenecks, and ensure that macroeconomic gains reach the grassroots. Inflation is not just a number; it is about people’s ability to afford food, pay rent, and school fees for their children and wards. If this downward trend in inflation does not translate into fuller market baskets, affordable transport, and better living standards, then it risks being dismissed as another abstract statistics.  If managed with discipline and foresight, this trend could mark the beginning of a new era of stability and prosperity. But until then, the average Nigerian remains cautiously hopeful, waiting for the day when inflation’s grip truly loosens and life becomes more affordable again.