Nigeria’s Inflation Rate Drops by 10% in One Month: Before there can be wonders, there must be wonders, by Abubakar M. Kareto
In a surprising turn of events, Nigeria’s inflation rate experienced a sharp decline, falling by 10.32 percentage points to 24.48 per cent in January 2025 from 34.8 per cent in December 2024, according to NBS.
Though it is rare, a nation’s inflation rate can drop by 10% in a month; I am not suggesting it is impossible; rather, several circumstances have to take place.
To lower inflation, drastic and aggressive government actions are needed; the government may thus apply quite rigorous policies including price restrictions, maximum pricing on basic commodities and services, Revaluation of the national currency strengthens it, therefore lowering the import costs. Large cuts in government expenditure help to lessen demand in the economy, therefore affecting prices.
Once more, there must be abrupt changes in world markets, including a sharp decline in oil prices, which would instantly cut transport and energy costs, thus influencing many commodities and services. The decline in demand for important exports: Should a nation mostly rely on exporting a given item (such as oil or agricultural products, a sudden decline in demand could result in lower pricing locally.
Moreover, unanticipated events, such as a natural disaster upsetting supply chains may create a brief increase in prices followed by a dramatic reduction when things return to normal. Many nations have gone through this during the Covid-19 epidemic.
Although a 10% decline is conceivable in Nigeria, one must take context into account. Usually indicating major economic crisis or government involvement, such a sharp change suggests either long-term effects on the nation or major change in direction.
The government’s announcement of a drop in inflation has unfortunately left many Nigerians bewildered. The decrease in inflation rates has not translated to a corresponding decrease in the cost of living, which remains high for Nigerians, with prices of goods and services staying elevated.
Real economic reforms are the only way to offer relief from true inflation; Nigerians must resist the trap of statistical comfort that the NBS is trying to drive us to. Yes, we know NBS is a government body and they would want to please the government at all costs.
Abubakar M. Kareto is a Public Affairs Analyst, Development Agenda Enthusiast, and a Concerned Citizen.
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