Inflation in Nigeria: A Descriptive Analysis of Recent Developments

As a result of recent reforms, inflation persistence in Nigeria has declined and the economy's responsiveness to monetary policy actions is improving. Historically, inflation in Nigeria was driven by food prices, supply-side shocks, deficit financing, and episodes of pronounced exchange rate depreciation, especially in 2016 and after the 2023 unification of foreign exchange windows. These reforms are breaking the entrenched patterns of inflation, reducing the impact of past drivers and helping to stabilize price dynamics. What we’re seeing now is a gradual easing in the breadth of inflationary pressures, with diffusion indicators and survey-based measures suggesting initial signs of a tentative re-anchoring of expectations and a moderation in headline inflation—particularly as tighter monetary policy and greater exchange rate stability take hold. This paper documents the dominant contribution of food to headline inflation, the rising importance of transport, housing, and exchange rate-sensitive components, and the effects of the 2025 rebasing exercise. It also analyzes how inflation persistence has declined since the 2023 exchange rate reform and discusses the policy implications for sustaining durable disinflation, especially amid recent global commodity price shocks.