Nigeria’s inflation rate eased slightly in April 2025, offering a small but welcome sign of relief for households and businesses facing prolonged cost pressures. According to the latest Consumer Price Index (CPI) report from the National Bureau of Statistics (NBS), headline inflation fell to 23.71%, down from 24.23% recorded in March.

While inflation remains high, the April dip represents a modest reversal following a brief uptick in March, when rates rose after a decline in February. Below, we unpack what’s changed, why it matters, and what it could mean for your finances and investment plans.

What Is Inflation and Why Does It Matter?

Inflation refers to the rate at which the general level of prices for goods and services rises over time. When inflation is high, the purchasing power of money declines, making everyday essentials like food, transportation, and housing more expensive. Persistent inflation can erode savings, disrupt planning, and slow economic growth.

Policymakers aim to strike a balance, keeping inflation low and stable while supporting economic activity. In Nigeria, the Central Bank (CBN) is primarily responsible for this balance through the setting of interest rates and other monetary tools.

The April 2025 Data

The headline inflation rate dropped year-on-year to 23.71% in April 2025—representing a 0.52% decline from the 24.23% recorded in March. But the month-on-month data reveals something more significant. The pace of inflation growth slowed to 1.86% in April, from 3.90% in March.

This means that although prices are still climbing overall, the speed at which they’re rising has decelerated considerably.

What’s Behind the Decline?

The overall cooling in inflation was driven by a combination of factors:

Food inflation, which often hits households the hardest, declined slightly to 21.26% in April, down from 21.79% in March. While reported separately, food inflation is also a major contributor to Nigeria’s headline inflation figure, making up a significant portion of the Consumer Price Index (CPI) basket—especially under the "food and non-alcoholic beverages" category, which alone accounted for 9.49% of year-on-year inflation in April.

This moderation was attributed to lower average prices for staples such as maize flour, wheat grain, dried okra, yam flour, soya beans, and other types of beans.

Core inflation, which excludes volatile items like food and energy, also saw a significant drop, decreasing from 24.43% in March to 23.39% in April year-on-year. Month-on-month, core inflation fell even more sharply, from 3.73% to 1.34%.

Together, the declines in both food and core inflation suggest a broader cooling of price pressures across Nigeria’s economy. This is likely a result of a mix of factors, including the Central Bank’s continued monetary tightening, stabilised commodity prices, and improving supply chains.

The CBN’s Response: Holding Interest Rates at 27.5%

In response to this shift, the Central Bank of Nigeria (CBN) opted to maintain its Monetary Policy Rate (MPR) at 27.5%. This decision was announced at the 300th Monetary Policy Committee (MPC) meeting held in Abuja, with all 12 committee members voting unanimously to hold current rates.

The Central Bank also retained the Cash Reserve Ratio (CRR) at the current rate. Commercial banks must keep 50% of their deposits aside as reserves, and 16% for mortgage banks. The liquidity ratio—the minimum cash banks must hold—remains at 30%. They also maintained the asymmetric corridor at +500/-100 basis points around the main rate, which lets banks adjust their lending rates within a set range without causing market shocks.

CBN Governor, Olayemi Cardoso, explained that the MPC’s decision reflects confidence in the impact of previous rate hikes and aims to consolidate recent gains without risking the fragile economic recovery.

What This Means for You

1. Slower Price Increases

   : While inflation remains high, the slower pace of price increases could bring some relief to consumers in the coming months, especially in food-related expenses.

2. Stable Interest Rates

   : With the MPR held steady, borrowing costs—particularly for businesses and mortgage holders—will remain high, but stable. For savers and fixed-income investors, this can help maintain relatively attractive yields.

3. Monetary Caution Signals Ongoing Risk

   : The CBN’s decision not to cut rates signals that policymakers are not yet convinced that inflation is fully under control. It suggests a “wait-and-see” approach, with room for future tightening if necessary.

Looking Ahead

It’s too early to declare victory over inflation. While April’s data is encouraging, inflation remains significantly above the target of 15%, and Nigeria’s economy is still vulnerable to external shocks, including global commodity prices and domestic supply constraints.

If this trend continues, especially if food prices remain stable and core inflation continues to ease, the second half of 2025 could bring a more sustained recovery in household purchasing power and business confidence.

For now, this is a moment of cautious optimism. Investors and consumers alike should monitor upcoming CPI releases and CBN policy updates to stay informed on where the economy is heading.

At PariVest, we keep a close eye on economic indicators that affect your money. Whether it’s inflation, interest rates, or housing trends, we help you understand what’s happening and how to plan for it.

Ask us questions about your investments at [email protected].