…Headline inflation dropped to 22.97% year-on-year, down from 23.71% in April, driven by declines in both core and food inflation
TUE JUNE 17 2025-theGBJournal| Nigeria’s inflation appears to be entering a short-term stabilization phase, supported by a relatively stable exchange rate, lower PMS (Petrol) prices, and the statistical effects of a high base from 2024.
Core inflation has begun to ease, and month-on-month inflation momentum is slowing, suggesting that earlier monetary tightening and improved FX liquidity are gaining traction.
Nigeria’s Headline inflation dropped to 22.97% year-on-year, down from 23.71% in April, driven by declines in both core and food inflation, according to data released on Monday by the National Bureau of Statistics (NBS).
On a monthly basis, price pressures also eased, signalling a gradual return of price stability amid ongoing monetary tightening.
Core inflation fell to 22.28% in May, down from 23.39% in April, while food inflation inched down to 21.14% from 21.26%.
On a month-on-month basis, food inflation edged up to 2.19% (from 2.06%), reflecting some seasonal pressures.
Core inflation, however, slowed more visibly month-on-month to 1.10%, from 1.34%.
However, the disinflation trend faces headwinds. On the domestic front, food inflation remains vulnerable.
Insecurity in key food-producing regions like Benue and the onset of the rainy season raise the risk of supply shocks due to disrupted farming and possible flooding.
These could constrain food supply and push prices higher, especially in rural areas where logistics are already weak.
Externally, rising geopolitical tensions in the Middle East particularly the oil-related standoff between Israel and Iran are threatening global crude supply.
If oil prices rise above $90–$100 per barrel, local pump prices could climb to over N1,000, reversing recent cost relief in transport and logistics and reintroducing inflationary pressure across the economy.
Such a scenario would complicate the Central Bank of Nigeria’s policy stance. While current indicators may support cautious rate normalization later in the year, any renewed surge in inflation driven by fuel or food price shocks could delay that timeline and keep monetary conditions tighter for longer.
Inflation is likely to moderate further, however, if fuel prices rise and food supply weakens, inflation could remain sticky and inch higher.
Overall, while near-term data signals progress, inflation risks remain skewed to the upside.
Sustained disinflation will depend not just on monetary and exchange rate stability, but also on managing domestic security and climate-related vulnerabilities.- Analysis provided by Comercio Partners
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