CBN Predicts Inflation Drop, But Economic Realities Tell a Different Story
The Central Bank of Nigeria (CBN) has projected a gradual decline in inflation over the next six months, according to its latest report on inflation expectations for February 2025. However, despite the figures presented, many Nigerians continue to face harsh economic realities that contradict these optimistic projections.
The report claims that businesses and households expect inflation to ease in the coming months, with respondents citing lower spending and a gradual reduction in expenses. A deeper analysis by income distribution shows that households earning above ₦200,000 per month perceive inflation to be moderating. This perception, however, is not reflective of the majority of Nigerians who struggle with rising food prices, high energy costs, and an unstable foreign exchange market.
Inflation: A Statistical Drop or Economic Illusion?
While the National Bureau of Statistics (NBS) reported a decline in inflation from 24.48% in January to 23.18% in February 2025, the reality for most Nigerians tells a different story. Prices of essential goods and services remain high, and household purchasing power continues to weaken. The so-called drop in inflation appears more like a technical adjustment rather than an actual relief for citizens who still pay exorbitant prices for basic necessities.
One of the major contradictions in the inflation narrative is the impact of tariffs on electricity and fuel. Despite the government’s claims of stabilizing inflation, recent hikes in electricity tariffs and fuel prices have placed additional financial burdens on Nigerians. Many businesses are struggling to keep up with production costs, further driving up the prices of goods and services.
High Interest Rates and a Struggling Economy
CBN’s report also highlighted that 65.1% of respondents called for a reduction in interest rates. The high interest rate environment, intended to curb inflation, has made borrowing expensive, stifling small and medium-scale businesses. With limited access to affordable credit, many businesses are forced to pass extra costs onto consumers, further fueling inflation rather than reducing it.
Tariff Hikes and the Exchange Rate Crisis
Another major factor affecting inflation is the unstable exchange rate. The naira has continued to lose value against major currencies, making imports more expensive. Given that Nigeria heavily depends on imports for essential goods, including food and medical supplies, a weak currency directly translates to higher consumer prices.
Electricity tariff hikes have also played a key role in worsening the economic situation. With the government moving towards cost-reflective tariffs, Nigerians now pay significantly more for electricity, making it harder for businesses and households to manage their expenses. Instead of easing inflation, these increased costs are driving up the prices of goods and services.
Inflation Drops on Paper, But Nigerians Feel No Relief
The government’s claim of a gradual drop in inflation does not reflect the struggles of ordinary Nigerians. The rising cost of living, fuel price hikes, electricity tariff increases, and an unstable exchange rate continue to put immense pressure on the economy. While statistical inflation figures may suggest improvement, the reality on the ground tells a story of hardship, increasing poverty, and a shrinking middle class.
Until economic policies address the root causes of inflation—including currency stability, production costs, and high tariffs—any reported drop in inflation will remain nothing more than a theoretical exercise with no real impact on the lives of Nigerians.
Reference
CBN Predicts Inflation Drop, But Economic Realities Tell a Different Story
