Nigeria’s inflation rate recorded its biggest drop in recent period to 18.02 per cent in September as above average decline in prices of basic food items, a stable currency and improved costs of logistics sustained improvement in average cost of living.
The National Bureau of Statistics (NBS) yesterday released its latest Consumer Price Index (CPI) Report showing that headline inflation rate dropped by 210 basis points from 20.12 per cent in August 2025 to 18.02 per cent in September 2025. It was the sixth consecutive time since April 2025.
The decline in headline inflation rate was driven by broad improvements in prices, especially with substantial drop in prices of food items. Food inflation had dropped by 500 basis points from 21.87 per cent in August 2025 to 16.87 points in September 2025.
The decline in food inflation was attributed to decrease in the average prices of common food items like maize grains, garri, beans, millet, potatoes, onions, eggs, tomatoes and fresh pepper among others.
Core inflation- which measures all items excluding farm produce and energy, dropped by 80 basis points to 19.53 per cent in September 2025 as against 20.33 per cent in August 2025.
The continuing disinflation mirrored analysts’ consensus on the price outlook, with headline inflation expected to drop further in the months ahead.
The NBS attributed the disinflation to the crash in the cost of food, energy and transportation.
NBS stated: “The average annual rate of food inflation for the twelve months ending September 2025 over the previous twelve-month average was 24.06 per cent, which was 13.47 per cent points lower compared with the average annual rate of change recorded in September 2024 at 37.53 per cent”.
The NBS report outlined disparity in prices across the country with all-items inflation rate for September 2025 highest in Adamawa, 23.69 per cent; Katsina, 23.53 per cent; and Nasarawa, with 22.29 per cent while Anambra, 9.28 per cent; Niger, 11.79 per cent and Bauchi, with 12.36 per cent recorded the lowest headline inflation rates.
Economists and finance experts yesterday were unanimous that the continuing disinflation reflected the improvements in macroeconomic environment.
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They however called for concerted fiscal policies to significantly expand the macroeconomic gains on the living conditions of the citizenry.
Experts expected the continuing disinflation to translate into further reduction in benchmark interest rate and stronger naira, potentially enhancing consumers’ purchasing power.
The NBS report came a day after the International Monetary Fund (IMF) raised Nigeria’s growth forecast to 3.9 per cent in 2025 and 4.1 per cent in 2026, citing improvements in the country’s macroeconomic outlook.
The IMF stated that the upgrade of its national growth projection for Nigeria was also based on favourable domestic situation.
Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, said the decline in inflation rate was “a significant indicator of improving macroeconomic conditions and policy traction”.
He however called for coordinated policies to improve average household purchasing power, consumer confidence, and real incomes.
“The gains achieved so far must therefore be consolidated through decisive and well-targeted policy actions,” Yusuf said.
According to him, the sustained disinflation trend is a welcome development and a sign of improving macroeconomic fundamentals, but government must do more to address fundamental basis of high cost of livings for low- and middle-income households.
He said: “The next phase of reform must therefore prioritize welfare-focused and cost-reduction measures that deliver tangible relief to citizens.
“Business confidence is rising, but consumer confidence remains fragile. Policies that enhance productivity, stabilise prices, and reduce the structural cost of doing business will not only strengthen the disinflation trajectory but also foster inclusive and sustainable economic recovery.
“With consistency, coordination, and structural reforms, Nigeria can achieve a stable single-digit inflation rate over the medium term — anchoring growth, improving welfare, and restoring confidence in the economy”.
He outlined that in order to consolidate the current gains and sustain the disinflation momentum, the government must enhance food security and agricultural productivity, reduce logistics and transport costs, address energy and production costs, expand access to affordable finance and deepen reforms in port and trade logistics.
Analysts at SCM Capital said disinflation trend reflected gains from economic reforms, foreign exchange (forex) rate stability and seasonal food supply dynamics.
“Inflation is projected to decline further in October 2025, supported by sustained forex stability, moderating input costs, and improved domestic supply conditions. The harvest season should further ease food prices, extending the disinflation trend.
“With inflation easing for six consecutive months, the Central Bank of Nigeria (CBN)’s Monetary Policy Committee (MPC) may consider another rate cut to stimulate growth. Overall, price pressures are expected to remain subdued, sustaining the economy’s momentum”, SCM Capital stated.
Analysts at CardinalStone noted that the “moderating inflation bodes well for Nigeria’s currency valuation”.
Analysts pointed out that the decline in food inflation in September was atypical of the range in recent years, but was relatively common between 1996 and 2005, a period marked by greater food security.
Analysts said the magnitude of the current month-on-month decline was larger than the historical average of 0.65 per cent observed during those earlier periods.
“This outsized food inflation decline may have been partly prompted by the recent material drop in market food prices and easing security concerns,” CardinalStone stated.
According to analysts, the ongoing disinflationary trends bode well for currency valuation with the combination of a sustained current account surplus and a steady build-up in forex reserves expected to underpin further naira appreciation.
CardinalStone projected that naira would close the year within the range of N1,400 and N1,450 per dollar.
“The softer inflation outlook reinforces the case for additional monetary easing by the CBN at its November policy meeting. We expect a 100 basis points reduction in Monetary Policy Rate (MPR) to 26.0 per cent.
“Lower inflation and an expected policy rate cut are likely to drive further yield compression across the naira credit market. While the curve may remain inverted, we expect a sharper adjustment at the short end of the curve.
“In October, we see scope for further moderation in inflation, as the drivers that were obtainable in September 2025 are likely to persist,” CardinalStone stated.
