Nigeria’s annual inflation has decreased for the second consecutive month, falling from 24.5% to 23.2%. This trend leads to speculations that the Central Bank may pause interest rate hikes. With revised CPI metrics targeting a more accurate representation, experts anticipate further drops in inflation rates, with potential easing measures expected by late 2025.
Nigeria has experienced a decrease in annual inflation for the second consecutive month, sparking optimism that price pressures may have reached their peak. According to data published by the National Bureau of Statistics, consumer prices rose by 23.2% in February, down from 24.5% in January. Moreover, food inflation declined to 23.5%, while core price growth accelerated to 23% from the previous 22.6%.
This ongoing cooling of inflation may provide the Central Bank of Nigeria (CBN) with the impetus to maintain steady interest rates during their forthcoming meeting in May. The central bank had paused its tightening measures last month, keeping the benchmark rate at 27.5% after several increases aimed at curbing inflation and stabilizing the naira.
Forecasts from Bloomberg Economics suggest that the annual headline inflation is likely to decline further, potentially dropping below 20% by the end of 2025 as energy prices stabilize. Yvonne Mhango, an economist at Bloomberg Africa, noted that policymakers might begin easing measures in the latter part of 2025.
A significant overhaul of the consumer price index (CPI) was conducted last month, the first in 16 years, which involved changing the reference year to 2024. This adjustment is expected to provide a more accurate representation of the inflation challenges faced by households across Nigeria. Notably, the weighting of food and non-alcoholic beverages in the index was reduced dramatically from 51.8% to 40%.
The latest data indicates a notable decrease in Nigeria’s inflation rate, fueling hopes for a sustained reduction in price pressures. The Central Bank of Nigeria may consider holding interest rates steady as a strategy in the face of this cooling inflation. Furthermore, significant revisions to the consumer price index aim to better reflect current economic conditions, potentially influencing future policymaking.
Original Source: financialpost.com
