Declining food prices and a stable foreign exchange rate are said to be responsible for the easing of Nigeria’s inflation rate to 22.97 per cent in May.

The National Bureau of Statistics (NBS), in its May 2025 Consumer Price Index (CPI) report released yesterday, showed that food inflation, one of the major drivers of inflation in Nigeria, dropped to 21.14 per cent in May from 21.26 per cent in April 2025.

The new inflation rate gives hope that the reform measures put in place by the present administration are beginning to reflect on the economy.

The present administration, on assumption of office in May 2023, introduced some reform measures, including the removal of fuel subsidy and the unification of the exchange rate. However, these sparked adverse effects, especially a spike in inflation, worsening the cost-of-living crisis in the country.

Inflation rose to as high as 34.80 per cent in December 2024.

But the Central Bank of Nigeria (CBN), determined to save the economy, introduced some measures, including the floatation of the naira and tightening of the monetary policy, to stabilise the exchange rate of the naira and check inflation.

The government also announced a 150-day import duty waiver so that grains can be brought in to stabilise the food market.

Since the beginning of this year, especially after NBS announced it had rebased the Consumer Price Index, with the base year now 2024, inflation has been moderate.

Food inflation, the major contributor to headline inflation in the country, has steadily dropped since January, when it was 26.10 per cent after rebasing, to 23.51 per cent in February, 21.79 per cent in March, and 21.26 per cent in April, before hitting 21.14 per cent in May.

The continuous drop in food prices during the planting season, when it ought to be highest, shows that the gains of the reform measures, such as lower exchange rates, are beginning to have an effect on the economy.

However, Nigerians are still paying high fares to move their goods from one point to another, costs that are often transferred to the final consumer, making the price of goods high. This is in spite of the fact that the price of fuel has dropped marginally.

Just recently, the telecoms sector got approvals to hike their rates by 50 per cent. They also cite the high cost of operations as the reason for the increase. This automatically means that services that depend heavily on internet services have also jacked up their rates.

It is obvious that the ongoing reforms by the government are having some positive effects on calming down inflation. However, there is still a need, according to analysts, for the government to review and adjust regulations that may be contributing to high costs in the services sector. They say revisiting pricing regulations in transportation and telecom could foster competition and lower prices.

They also believe that encouraging new entrants into the market can enhance competition, which often leads to lower prices and improved services. This can be done through reducing barriers to entry and providing tax incentives.

“Encouraging the use of local services and products can help reduce reliance on imported goods and services, which may be subject to higher costs due to exchange rates,” said Professor Godwin Oyedokun of Lead City University, Ibadan.

He said he is happy the government is thinking along the lines of encouraging made-in-Nigeria goods with the recent Nigeria First policy of the government.

He said the government can also provide temporary subsidies for public transportation or essential services to reduce costs for consumers.

“Implementing a combination of these strategies could help to alleviate the pressure on prices in the services sector while ensuring that consumers continue to receive quality services,” he concluded.