In March 2025, Nigeria’s inflation rate rose to 24.23% from 23.18% in February, marking the first increase since the rebasing of the Consumer Price Index (CPI) in January. Food prices saw a slight decrease year-on-year but experienced a monthly increase, largely driven by the transition from the 2024 harvest to the new planting season. Core inflation, which excludes volatile items like food and energy, also continued its upward trend, rising to 24.43%, suggesting that inflation is not solely influenced by rising energy and transportation costs. Structural and monetary risks, coupled with external factors like potential US trade tariffs, contributed to this rise.
Despite these trends, the data from the National Bureau of Statistics (NBS) revealed several inconsistencies and unexplained spikes, especially at the regional level. The Southwest region, for instance, saw a drastic inflation jump from 19.72% in February to 27.47% in March, raising concerns about data accuracy and regional economic conditions. Some states, like Sokoto, displayed significant shifts in their inflation rates, with Sokoto moving from the third-highest inflation in February to one of the lowest in March, despite continued challenges in food and energy prices. These anomalies point to gaps in data transparency and calls for further clarification from the NBS.
Energy inflation surged to 9.21% in March from a negative 0.99% in February, reflecting rising fuel and energy costs, which also contributed to higher transport expenses. Meanwhile, the exchange rate weakened further, averaging N1,526.27/$ in March compared to N1,501/$ in February, further amplifying cost pressures. Regional variations in inflation highlighted the differing economic conditions across Nigeria’s states, with states like Kaduna experiencing a dramatic reversal in their inflation trends, showcasing the complex nature of inflation dynamics in the country.
Overall, while inflationary pressures in Nigeria showed a slight deceleration in the early months of 2025, the sharp increase in March, combined with data inconsistencies, calls for further examination of the underlying drivers. Economists emphasize the need for clearer and more timely CPI data, especially following the rebasing process, as the Central Bank of Nigeria prepares for its upcoming Monetary Policy Committee meeting. Continued economic instability, driven by factors like energy costs, FX volatility, and structural challenges, will require ongoing monitoring to assess the effectiveness of policy responses.
Source: Proshare