Nigeria’s Inflation Drops to 15% as Naira Stability Strengthens Investor Confidence

Nigeria’s inflation rate plunged to 15.10% in January 2026, marking a significant improvement from 27.61% in January 2024. Analysts credit the decline to a combination of monetary tightening by the Central Bank of Nigeria (CBN), structural reforms, and a stronger foreign exchange position. The easing of inflation has provided relief to households facing rising costs and bolstered confidence among investors looking for stability in Africa’s largest economy.

Data from the National Bureau of Statistics (NBS) show the Consumer Price Index (CPI) fell to 127.4 in January from 131.2 in December, a 3.8-point drop. Price reductions were seen in staples such as tomatoes, garri, eggs, millet, vegetables, and onions. The nationwide easing of food inflation has directly improved household purchasing power and indicates that the CBN’s interventions are beginning to have tangible effects on everyday living costs.

The CBN has emphasized that structural reforms and careful monetary policy are key to sustaining stability. At its last Monetary Policy Committee (MPC) meeting in November 2025, the bank retained the benchmark interest rate at 27% and adjusted the asymmetric corridor to encourage banks to lend more to the real economy. Governor Olayemi Cardoso noted that the measured approach ensures that monetary policy actions filter gradually through the economy, supporting lower borrowing costs, stable inflation, and improved investor confidence.

Nigeria’s gross external reserves surged to $46.8 billion as of February 4, 2026—the highest level in eight years—covering around 14 months of imports. The increase stems from higher oil exports, diaspora remittances, and stronger foreign portfolio inflows. Analysts believe this has reduced pressure on the naira, which appreciated slightly to N1,385 per dollar, and helped reinforce confidence in the currency ahead of the 2026 general elections.

Economists predict that the combination of lower inflation, stronger reserves, and disciplined monetary policy will support GDP growth of 4.2% in 2026. While external shocks and oil price fluctuations remain risks, the CBN’s focus on credit expansion, financial innovation, and support for MSMEs is expected to sustain investment and job creation. Experts say that the next MPC meeting may consider a modest policy rate cut to further encourage lending, reinforcing a gradual but steady path toward macroeconomic stability.

source: punch