Market News

BY Chinwe Michael 

Analysts have said that the recent decline in headline inflation can be attributed to naira stability and a reduction in Premium Motor Spirit (PMS) prices.

Nigeria’s inflation fell to 23.2 percent in February, the second consecutive drop after the National Bureau of Statistics (NBS) changed its methodology.

Annual consumer prices rose 23.2 percent in February from 24.5 percent in January, according to data by NBS.

“A relatively stable exchange rate has helped contain the cost of imported goods, easing pressure on core inflation,” Comercio Partners in a report.

Similarly, CSL Stockbrokers highlighted that “The inflation slowdown in February can be attributed to the relative stability of the local currency, which appreciated by approximately 2.1% month-on-month in the official market, supported by improved foreign exchange dynamics. Lower fuel prices also likely helped ease inflationary pressures.

In February, the naira started at N1,491.25, peaked mid-month at over N1,510, and settled at N1,500.73 by month-end, according to Central Bank of Nigeria (CBN) data. Throughout the month, the naira hovered between N1,400–N1,500, providing some exchange rate stability.

Also, the Dangote Petroleum Refinery has influenced fuel pricing through strategic price cuts, citing favourable global energy market conditions and declining crude oil prices.

The refinery reduced the ex-depot price of PMS from N950 to N8904 per litre and then the price was further lowered to N825 per litre, an N655 reduction aimed at easing consumer burdens and supporting economic recovery policies.

‘Lower PMS prices have led to reduced transportation and logistics costs, contributing to downward inflationary pressure. The interplay of market deregulation and strategic pricing by major industry players like Dangote Refinery has introduced greater competition, benefiting consumers through lower fuel prices,’ analysts at Comercio Partners said.

The rebased figure impact on food inflation

According to NBS, food inflation dropped to 23.51 percent year-on-year from 37.92 percent in February 2024.

On a month-on-month basis, food inflation stood at 1.67 percent, signalling a slight break in price pressures on staple foods

Nigeria’s cost-of-living crisis has eased for the first time since President Tinubu assumed office in May 2023, offering an unexpected respite for households and a possibility of the CBN’s interest rate cut in the next Monetary Policy Committee (MPC) meeting.

CSL stockbrokers said the MPC will begin cutting its policy rate in the second half of 2025, potentially starting with the May meeting.

“A continued downward trend in inflation over the coming months should

strengthen the case for the Central Bank to adopt a more accommodative policy stance later this year, which would support economic activity,” CSL said in a report.

However, the analysts said that sustaining these gains requires continuous market oversight to prevent monopolistic pricing and ensure competitive dynamics remain intact.

“Additionally, while immediate inflationary relief is evident, policymakers must assess the long-term impact of fluctuating global oil prices and domestic market forces,” they said.