Nigeria’s inflation rate has dipped to 21.12 percent in August 2025, marking the fifth consecutive month of decline. According to data from the National Bureau of Statistics, this represents a 1.79 percent decrease from the 21.88 percent recorded in July 2025. On a year-on-year basis, the country’s inflation rate has lowered by 12.03 percent compared to 32.15 percent in August last year.
The decline in inflation has been attributed to a slowdown in food inflation, with prices of imported rice, local rice, millet, semolina, flour, maize, and others decreasing. Food inflation dropped to 21.87 percent in August, a slight decrease from 21.88 percent in July. This development has sparked calls for the Central Bank of Nigeria to cut interest rates, currently at 27.50 percent.
Economists argue that high interest rates are negating the impact of inflation drops on Nigerians. Gbolade Idakolo, CEO of SD & D Capital Management, believes that an interest rate cut could reduce pressure on the real sector and lead to a decrease in the cost of goods and services. He notes that the easing of inflation could make the Central Bank consider an interest rate cut in its next Monetary Policy Committee meeting scheduled for September 22-23, 2025.
Prof. Godwin Oyedokun of Lead City University in Ibadan emphasizes that the impact of inflation drops will only be felt if these changes pass through the economy and affect the real lives of Nigerians. He cautions that while the official inflation rate shows a decrease, many Nigerians may still experience the effects of previous high inflation levels and other systemic economic issues.
The Central Bank of Nigeria’s decision on interest rates will be closely watched, as it is expected to have a significant impact on the country’s economy. A reduction in interest rates could bring relief to the real sector and lead to a decrease in the cost of goods and services, ultimately improving the living standards of Nigerians. The next Monetary Policy Committee meeting will be crucial in determining the direction of the country’s economic policy.
