Nigeria’s Battle Against Inflation: How CBN’s Tough Policies Are Easing Economic Pressures
Nigeria’s economy has long faced headwinds ranging from corruption and insecurity to poor infrastructure and heavy dependence on imports. But the most biting challenge in recent years has been inflation, which erodes citizens’ purchasing power, discourages investment, and destabilizes the currency. Rising food prices, high fuel costs, and global disruptions have made life more difficult for ordinary Nigerians, while also placing enormous pressure on policymakers to act.
The Central Bank of Nigeria (CBN) has historically leaned on monetary policy to tame inflation. During earlier spikes, such as in 2017 when inflation hit 19 percent, the CBN raised the Monetary Policy Rate (MPR), successfully pushing inflation down to more manageable levels. However, excess money supply—rising from N1.4 trillion in 2015 to over N4 trillion by late 2024—combined with policy missteps like money printing and subsidy spending, fueled further inflationary pressures under previous administrations.
When President Bola Tinubu’s government removed fuel subsidies and unified exchange rates, the moves were applauded internationally but also unleashed painful short-term inflation. By December 2024, inflation peaked at a staggering 34.8 percent, the highest in decades. CBN Governor Olayemi Cardoso responded with an aggressive inflation-targeting framework, signaling a shift towards transparency and consistency in monetary policy.
The results are beginning to show. By July 2025, inflation had dropped to 21.88 percent, offering Nigerians a glimmer of relief. Recent surveys show that fewer people now perceive inflation as overwhelmingly high—down from 71 percent in June to 66.2 percent in July. Meanwhile, the Purchasing Manager’s Index (PMI) has recorded eight consecutive months of expansion, suggesting that businesses are slowly regaining confidence and that the economy may be stabilizing.
While challenges remain, including food insecurity and the high cost of borrowing, the outlook appears more hopeful than it has in years. If the CBN maintains discipline and reforms are followed through, Nigeria may finally be taming the inflation headwind that has long weighed down its growth and the everyday lives of its citizens.
source: this day