Nigeria: Inflation is Falling, but Not Fully Fixed

Nigeria is beginning to see early signs of relief from inflation after several years of painful price increases. The Central Bank of Nigeria (CBN) projects that inflation could fall to around 12.9% by the end of 2026, down from an average of about 21% in 2025. If achieved, this would mark a significant improvement, but it is important to note that this is still a forecast, not current reality.

The improvement is already visible, but gradual. As of early 2026, inflation is hovering around 15%, a notable drop from the peak of over 34% recorded in 2024. Food inflation, which once surged close to 40%, has also eased, though it remains high and continues to pressure households.

What Changed?

Several factors are contributing to the slowdown in inflation:

First, the naira has shown relative stability in recent months after a period of sharp depreciation between 2023 and 2024. A more stable currency helps reduce the cost of imports, which in turn slows inflation.

Second, agricultural output is recovering after disruptions caused by flooding and supply shocks in previous years. Improved harvests have increased food supply, helping to ease some pressure on food prices, although insecurity in farming regions remains a concern.

Third, the Central Bank of Nigeria has maintained high interest rates to curb inflation. By making borrowing more expensive, demand slows, which helps reduce the pace at which prices rise. This policy has played a key role in stabilizing inflation trends.

Fourth, part of the sharp decline from 2024 levels is influenced by base effects and CPI rebasing, meaning the drop may appear more dramatic than the underlying reality.

Fuel Prices and Cost Pressures

Fuel prices remain a major factor in Nigeria’s cost of living. After the removal of fuel subsidies in 2023, petrol prices rose sharply. As of 2026, prices remain high and volatile, typically ranging between ₦1,100 and ₦1,400 per litre.

This continues to affect transportation, food distribution, and overall living costs across the country.

What This Means for Nigerians

The decline in inflation is a positive development, but it does not mean that prices are falling. Instead, prices are still rising, just at a slower pace.

At the peak of inflation above 34%, purchasing power dropped significantly. Many households struggled to afford basic goods, savings lost value, and financial planning became extremely difficult.

Now, with inflation around 15%, there is some improvement. Budgeting is becoming more predictable, and businesses have slightly better visibility for planning. However, the cost of living remains high, and relief is gradual rather than immediate.

Are Prices Actually Falling?

Some food items have seen modest price reductions from their peak levels due to improved supply. However, this is not a broad-based decline in prices.

Overall, most goods and services remain expensive relative to income levels, and the impact of previous inflation is still being felt.

Ongoing Risks

Despite the progress, several risks could reverse the current trend. Rising global oil prices could push fuel costs higher. Exchange rate instability could increase the cost of imports. Insecurity in key farming regions could disrupt food production and drive prices up again.

Conclusion

Nigeria’s inflation outlook is improving, but the situation is not yet fully stable. Inflation is slowing, not disappearing.

If inflation continues to decline toward the projected 12.9% by the end of 2026, the economy could move into a more stable phase by 2027. For now, the reality remains that while conditions are getting better, they are not yet easy for most Nigerians.