The consecutive decline in Nigeria’s headline inflation for the fifth time has intensified calls for the Central Bank of Nigeria to cut interest rates.
DAILY POST reports that Nigeria’s inflation rate dropped to 21.12 per cent in August 2025. The latest drop represents a 1.79 per cent decrease compared to the N21.88 per cent recorded in July 2025, National Bureau of Statistics data showed.
On a year-on-year basis, the country’s inflation lowered by 12.03 per cent when compared with 32.15 per cent in August last year, indicating the cooling of prices, though technically attributed to the CPI rebase in the earlier part of 2025.
In the same vein, food inflation dropped significantly in August, NBS said.
According to the NBS, the slowdown in prices of imported rice, local rice, millet, semolina, flour, maize and others pushed food inflation to 21.87 per cent, a slight decrease from 21.88 per cent in July.
Nigeria’s positive inflation trend has sparked a call for an interest rate cut from its current 27.50 per cent by the Central Bank of Nigeria’s Monetary Policy Committee.
Speaking to DAILY POST on the August CPI and inflation rate data, the Chief Executive Officer of SD & D Capital Management, Gbolade Idakolo, said the consecutive easing could make CBN consider an interest rate cut in its next MPC meeting scheduled for Monday, September 22, and Tuesday, September 23, 2025.
He said high interest rates make it impossible for inflation drops to have an impact on Nigerians.
According to him, interest rate reduction would bring down the pressure on the real sector and cause a considerable reduction in the cost of goods and services.
“The easing of inflation to 20.12% could make the CBN cut interest rates at the next MPC meeting. The CBN policy on interest has consistently reduced inflation month on month for the past 4 months, and it is a signal that the economy is taking a positive turn.
“However, consistent interest rate hikes have really affected the real sector, with the manufacturing and services sectors feeling the pinch and, in turn, causing a continuous increase in goods and services.
“Reduction in interest rates could reduce pressure on the real sector and cause a considerable reduction in the cost of goods and services.
“Generally, the impact of reduction in inflation is yet to be felt across the board because the cost of doing business is still high, and the real economic dividends of easing inflation have not improved the cost of living,” he told DAILY POST.
On his part, a don at Lead City University in Ibadan, Prof. Godwin Oyedokun, said inflation drops would only be plausible if these changes passed through the economy and impacted the real lives of Nigerians.
As reported, Nigeria’s inflation rate eased for the fifth consecutive month in August 2025, decreasing to 20.12 per cent from 21.88 per cent in July.
This decline has been attributed mainly to a slowdown in food inflation and overall price stabilisation, which is critical for the nation, particularly given the context of ongoing economic challenges.
“The extent to which Nigerians feel the impact of this decline in inflation can vary based on several factors:
“Consumer Experience: While the official inflation rate shows a decrease, many Nigerians may still feel the pinch due to previous high inflation levels and other systemic economic issues, such as currency fluctuation, unemployment rates, and the overall economic climate.
“Real-Time Relief: Though the decline in inflation is a positive sign, for most citizens, the experience of real-time relief often depends on the practical implications of these changes. If prices of essential goods, especially food, don’t decrease proportionately or remain high relative to incomes, the perceived benefit may be minimal.
“Previous Trends: Given the history of volatility in Nigeria’s economy, many citizens may remain sceptical about whether these trends will be sustained and truly translate into improved purchasing power and living standards.
“While the reduction in inflation to 20.12 per cent is a noteworthy development, the real impact on living costs for Nigerians will hinge on how swiftly and effectively these changes are passed through the economy and whether they translate into tangible benefits for consumers.
“Continued monitoring of food prices, wage growth, and overall economic conditions will be essential in gauging the long-term effects of this inflation decline,” he explained to DAILY POST.
