Nigeria’s inflation rate has been a hot topic lately, and for good reason. The latest report from the National Bureau of Statistics (NBS) shows that the headline inflation rate dropped to 22.22% in June 2025, down from 22.97% in May. This is the lowest it has been since April 2023, and it’s a significant decline from the 34.19% recorded in June 2024. But what does this mean for you and the economy? Let’s break it down.
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What is Headline Inflation?
Headline inflation is the measure of the total inflation within an economy, including all goods and services. It is the big number that economists and policymakers look at to understand how prices are changing over time. When inflation is high, it means that the cost of living is rising, and your money doesn’t go as far as it used to. Meaning your purchasing power continue to nosedive. A decline in inflation, like we’ve seen in June 2025, suggests that price increases are slowing down, which can be a relief for consumers and businesses alike, even though that does not seem to be the case in Nigeria.
Key Highlights from the June 2025 Inflation Report
- Year-on-Year Decline: The headline inflation rate dropped by 11.97 percentage points compared to June 2024.
- Month-on-Month Increase: Despite the year-on-year decline, the month-on-month inflation rate was 1.68%, slightly higher than the 1.53% in May 2025.
- Food Inflation: Decreased to 21.97% year-on-year, down from 40.87% in June 2024. However, month-on-month food inflation rose to 3.25% from 2.19% in May.
- Core Inflation: Stood at 22.76% year-on-year, excluding volatile items like food and energy.
Why is Inflation Declining?
Several factors are contributing to the decline in inflation:
- Base Effects: The inflation rate is compared to the same month in the previous year. Since inflation was higher in 2024, the year-on-year comparison shows a significant drop.
- Exchange Rate Stability: Exchange rate pays a major in the inflation rate of import dependent countries like Nigeria. A relatively stable exchange rate has helped reduce the cost of imported goods, which can contribute to lower inflation.
- CPI Rebasing: The NBS recently updated the Consumer Price Index (CPI) to a 2024 base year, which adjusted the basket of goods and services. This rebasing has influenced the reported inflation figures, making historical comparisons a bit tricky.
What Does This Mean for You?
The decline in inflation is generally good news for consumers and businesses, at least on paper. A lower inflation should result in:
- Cost of Living: Slower price increases mean that your money can buy more than it did when inflation was higher. This can ease the financial strain on households.
- Business Operations: For businesses, lower inflation can mean more predictable costs, which can help with planning and investment decisions.
- Purchasing Power: With inflation easing, your purchasing power should begin to improve, allowing you to get more value from your income.
However, it’s important to note that while the overall trend is positive, some sectors, like food, are still experiencing short-term price increases. This means that while the general cost of living might be stabilising, specific expenses could still be rising.
Regional Variations in Inflation
Inflation doesn’t affect all parts of Nigeria equally. For example:
- Food Inflation: Varied widely across states, from 6.21% in Katsina to 47.40% in Borno.
- Month-on-Month Food Inflation: Ranged from 7.63% in Borno to 11.90% in Enugu.
These regional differences highlight the importance of local factors, such as agricultural output and transportation costs, in driving inflation.
Looking Ahead
While the decline in inflation is encouraging, it is essential to keep an eye on future trends. The NBS’s rebasing of the CPI and the ongoing economic challenges mean that inflation could still be volatile. Experts suggest that the slowdown might continue in the short term, but global commodity prices and domestic policies could influence future rates. For more details, check the full NBS report at nigerianstat.gov.ng.
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FAQs About Nigeria’s Inflation Rate
What is headline inflation?
Headline inflation is the overall measure of inflation in an economy, including all goods and services. It reflects the average change in prices over time and is a key indicator of the cost of living.
Why did Nigeria’s inflation rate drop in June 2025?
The drop in inflation is largely due to base effects (comparing to higher rates in 2024), a stable exchange rate, and the recent rebasing of the Consumer Price Index (CPI) by the NBS.
How does the decline in inflation affect me?
A lower inflation rate means that prices are rising more slowly, which can improve your purchasing power and reduce the cost of living. However, some sectors, like food, may still see short-term price increases.
What is the difference between headline inflation and food inflation?
Headline inflation includes all goods and services, while food inflation specifically measures changes in food prices. In June 2025, food inflation was 21.97%, slightly lower than the headline rate of 22.22%.
Is the decline in inflation likely to continue?
While the trend is downward, future inflation rates could be influenced by factors like global commodity prices, domestic policies, and the ongoing effects of CPI rebasing. Experts suggest monitoring these factors closely.
What is CPI rebasing and how does it affect inflation data?
CPI rebasing updates the base year and basket of goods used to measure inflation. In 2025, the NBS rebased the CPI to 2024, reducing the weight of food, which contributed to lower reported inflation rates.
Why are food prices still rising month-on-month despite lower inflation?
Month-on-month food inflation rose to 3.25% in June 2025 due to seasonal factors like the Sallah festival, which increased demand for livestock and commodities, despite the year-on-year decline.
How do regional differences in inflation impact Nigerians?
Inflation varies across states, with food inflation ranging from 6.21% in Katsina to 47.40% in Borno. This affects cost of living differently, driven by local factors like agricultural output and transport costs.
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Conclusion
The decline in Nigeria’s headline inflation to 22.22% in June 2025 is a positive development, signaling a slowdown in price increases and offering some relief to consumers and businesses. However, with month-on-month inflation still showing slight increases and regional disparities persisting, it’s important to stay informed about economic trends. Keep an eye on future reports and consider how these changes might impact your financial decisions.
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