Nigeria’s Economy Under Scrutiny as Inflation Rate Remains High

Economy and Energy Expert, Kelvin Emmanuel, has urged the Federal Government to focus on economic drivers that will reduce the inflation rate, in order to improve the cost of living of the average Nigerian. Emmanuel’s advice comes as the country’s headline inflation rate eased for the fourth consecutive month in July 2025, falling to 21.88 per cent from 22.22 per cent in June.

According to figures from the National Bureau of Statistics, the July rate was 0.34 percentage points lower than the previous month and 11.52 percentage points below the 33.40 per cent recorded in July 2024. However, food inflation stood at 22.74 per cent year-on-year in July, compared to 39.53 per cent in the same month last year. Despite the moderation in inflation, analysts note that the persistent monthly increases underline the reality that the cost of living remains elevated for many Nigerians.

Emmanuel identified three primary areas that drive the economy: inflation, exchange rates, and interest rates. He noted that the Central Bank of Nigeria and the Federal Government were yet to effectively address these areas. The expert also expressed concerns about the accuracy of the inflation numbers, stating that they are distorted. He advised the government to prioritize reducing inflation, which would subsequently allow for a reduction in interest rates and adjustments to the cash reserve ratio.

The cash reserve ratio, which has increased from 14 per cent in 2014 to 50 per cent today, is the highest in Nigeria’s history. There are rumors that the Monetary Implementation and Technical Committee may recommend further increases to the interest rate. Emmanuel emphasized that the immediate concern for the Nigerian government should be to bring down inflation, which would have a positive impact on the per capita income of Nigerians.

In addition to addressing inflation, Emmanuel spoke to other economic challenges, including the national budget and those affecting the Nigerian National Petroleum Company Limited. He advised the State House to allow the state oil company to operate independently, suggesting that it be privatized and listed on the market to allow for more efficient management and revenue generation. President Bola Tinubu recently announced that the Federal Government was no longer borrowing from local banks, citing strong fiscal performance since the start of the year. As Nigeria continues to navigate its economic challenges, the government’s response to inflation and other economic drivers will be crucial in determining the country’s economic trajectory.