Nigeria’s inflation rate continued its downward trajectory, easing to 16.05% in October from 18.02% in September 2025, driven largely by the Central Bank of Nigeria’s (CBN) monetary policy easing and key reforms aimed at stabilizing the foreign exchange market and boosting reserves, which have surged to $46 billion.
The Monetary Policy Committee (MPC) is expected to sustain this easing cycle during its 303rd meeting in Abuja on November 24-25. CBN Governor Yemi Cardoso highlighted earlier MPC decisions that made the naira more competitive internationally and enhanced Nigeria’s investment climate.
According to the CBN, current policy easing and structural reforms are gradually permeating the broader economy, stabilizing the naira and lowering lending rates as inflation moderates.
“The recent monetary policy actions are a deliberate strategy to restore macroeconomic stability after years of fiscal and external pressures,” the bank said, noting that lower lending rates are a tangible outcome of these policies.
The CBN emphasized that fiscal and monetary policy alignment is crucial, especially amid rapid technological innovation and digital finance growth transforming the financial landscape.
At its 302nd meeting on September 22-23, 2025, the MPC cut the benchmark interest rate by 50 basis points, from 27.5% to 27%, marking the first rate cut after a prolonged tightening cycle. This move significantly contributed to the decline in inflation.
The National Bureau of Statistics (NBS) confirmed the moderation in inflation in its October Consumer Price Index (CPI) report, stating:
“Headline inflation declined to 16.05% in October 2025 from 18.02% in September 2025. On a year-on-year basis, inflation was 17.82% lower than the 33.88% recorded in October 2024.”
However, month-on-month inflation rose slightly to 0.93% in October from 0.72% in September, indicating a higher rate of price increase compared to the previous month.
The combined impact of easing inflation, improved naira competitiveness, and increased foreign reserves signals a positive phase for Nigeria’s economy. The International Monetary Fund (IMF) projects 3.9% GDP growth for Nigeria in 2025, citing progress in FX market stability.
The CBN’s FX reforms under Governor Cardoso, coupled with federal government policies supporting local production, have been pivotal in reducing forex demand pressures and curbing domestic prices.
Naira Shows Gradual Recovery
The naira has strengthened by approximately 3.5% against the U.S. dollar over the last ten months, trading at around N1,450/$ on the parallel market. Starting the year near N1,555/$, the currency experienced volatility but rebounded from a low of N1,597/$ in April to a recent official rate of N1,475/$ in October.
CBN Governor Cardoso stated at the G-24 press briefing during the IMF/World Bank Annual Meetings in Washington DC that the naira’s improved competitiveness is part of a broader economic restructuring, making Nigeria’s economy resilient with buffers against global shocks.
“We have achieved a positive trade balance and encouraged a shift from imports to exports of locally produced goods. Oil remains the primary commodity exposed to trade tariffs, but the impact was modest,” he said.
Stakeholder Perspectives
Dr. Baba Musa, Director-General of the West African Institute for Financial and Economic Management (WAIFEM) and President of the Nigerian Economic Society, described Nigeria’s economic outlook as encouraging but cautious.
In his report at the IMF/World Bank meetings titled *“Nigeria’s Economic Outlook at a Turning Point”*, he said:
“Projected GDP growth of 3.9% in 2025, up from 3.5% in 2024, reflects resilience and strategic recalibration. However, Nigeria remains structurally fragile and must sustain reforms and ensure that growth translates into jobs, higher incomes, and social welfare.”
He emphasized the need for policy consistency, human capital investment, and inclusive growth to consolidate recovery and foster equitable economic transformation.
Musa highlighted sectors driving growth, including stronger oil production, improving services (telecoms, finance, transport), and enhanced agricultural output due to favorable weather and government support.
He also cited the recent GDP rebasing, which now captures growth in high-potential areas such as digital services, modular refining, and the creative industry—offering new opportunities for job creation and innovation.
Regarding inflation, Musa noted:
“Headline inflation declined to 18.02% in September 2025 from 20.12% in August, reflecting improved food supply, seasonal harvests, and targeted energy sector interventions. The CBN’s interest rate cut signals a calibrated effort to balance inflation control with growth and employment goals.”
He praised improving investor sentiment, citing Shell’s approval of the HI Offshore Gas Project, expected to supply 350 million standard cubic feet of gas per day to Nigeria LNG, which will stimulate jobs and strengthen Nigeria’s position as Africa’s energy hub.
Efforts to Boost FX Inflows
The CBN has implemented multiple initiatives to increase foreign exchange inflows, including improving diaspora remittances through new product developments and licensing more International Money Transfer Operators (IMTOs).
The apex bank also adopted a willing buyer-willing seller FX model and enhanced timely access to naira liquidity for IMTOs, simplifying dollar inflow channels for authorized dealers and market participants. These efforts have contributed significantly to growing gross FX reserves and stabilizing the naira.
With estimated diaspora remittances of $23 billion annually, this remains a vital forex source alongside expanding policies to attract more inflows.
