By Ada Samson in Abuja
Nigeria’s inflation trajectory showed tentative signs of moderation as the headline inflation rate declined for the second consecutive month to 22.22% in June 2025, down from 22.97% in May, according to the latest data from the National Bureau of Statistics (NBS).
This 0.75 percentage point reduction offers cautious optimism for an economy that has battled double-digit inflation for several years, though underlying price pressures continue to weigh heavily on consumers and businesses alike.
Understanding the Inflation Dynamics
The year-on-year inflation rate of 22.22% represents a significant 11.97 percentage point improvement from the 34.19% recorded in June 2024. This substantial annual decline suggests that some macroeconomic stabilisation measures may be gradually taking effect. However, the month-on-month inflation figure tells a more nuanced story, rising to 1.68% in June from 1.53% in May, indicating that while the annual comparison shows improvement, short-term price pressures remain persistent.
The Consumer Price Index (CPI), which tracks changes in the price level of a representative basket of consumer goods and services, increased to 123.4 points in June, up from 121.4 points in May. This 2.0-point monthly increase reflects ongoing price pressures across multiple sectors of the economy, with certain essential commodities continuing to record significant price surges.
Sectoral Breakdown of Inflation Pressures
Food inflation remains the most significant driver of overall price increases, accounting for 8.89% of the total inflation figure. While the annual food inflation rate showed improvement at 21.97% in June 2025 compared to 40.87% in June 2024, the monthly food inflation rate actually accelerated to 3.25% from 2.19% in May. This acceleration was particularly noticeable in staple food items including dried green peas, fresh pepper, shrimps, crayfish, fresh meat, tomatoes, and plantain flour – all of which recorded substantial price increases during the month.
Core inflation, which excludes volatile agricultural produce and energy prices, stood at 22.76% year-on-year, showing a notable decline from 27.4% in June 2024. However, the month-on-month core inflation rate increased to 2.46% in June from 1.10% in May, suggesting that underlying inflationary pressures in the non-food sectors remain stubbornly high. This persistent core inflation reflects ongoing challenges in sectors such as housing, transportation, and services.
Urban-Rural Inflation Disparities
The inflation experience continues to vary significantly between urban and rural areas, reflecting differences in consumption patterns, market structures, and supply chain dynamics. Urban areas recorded year-on-year inflation of 22.72% in June, down from 36.55% in June 2024, while rural areas saw 20.85% inflation, a decline from 32.09% over the same period.
The monthly data reveals an interesting divergence: urban inflation accelerated to 2.11% in June from 1.40% in May, while rural inflation actually slowed to 0.63% from 1.83%. This suggests that price pressures may be concentrating more in urban centers, possibly due to higher demand pressures and greater exposure to imported inflation through exchange rate effects.
Geographical Variations Across States
The state-level analysis reveals dramatic variations in inflationary experiences across Nigeria’s 36 states and the Federal Capital Territory. Borno State recorded the highest year-on-year inflation at 31.63%, followed by Abuja (26.79%) and Benue (25.91%). At the other end of the spectrum, Zamfara (9.90%), Yobe (13.51%), and Sokoto (15.78%) recorded the most moderate price increases.
The month-on-month picture shows even more striking variations. Ekiti (5.39%), Delta (5.15%), and Lagos (5.13%) experienced the sharpest price surges, while Zamfara (-6.89%), Niger (-5.35%), and Plateau (-4.01%) actually recorded price declines – a rare phenomenon that may reflect localized supply improvements or statistical base effects.
Food Inflation: A Persistent Challenge
Food inflation patterns varied dramatically across states, with Borno recording alarmingly high year-on-year food inflation of 47.40%, followed by Ebonyi (30.62%) and Bayelsa (28.64%). In contrast, Katsina (6.21%), Adamawa (10.90%), and Sokoto (15.25%) recorded much more moderate food price increases.
The monthly food inflation picture was equally varied, with Enugu (11.90%), Kwara (9.97%), and Rivers (9.88%) experiencing the sharpest increases, while Borno (-7.63%), Sokoto (-6.43%), and Bayelsa (-6.34%) saw significant declines. These dramatic variations likely reflect local harvest conditions, security situations affecting agricultural production and distribution, and state-specific policy interventions.
Economic Implications and Policy Challenges
The marginal decline in annual headline inflation suggests that the Central Bank of Nigeria’s monetary tightening measures may be gradually gaining traction. However, the acceleration in monthly inflation, particularly in food prices, indicates that supply-side constraints continue to pose significant challenges. Transportation costs, energy prices, and ongoing disruptions to agricultural production and distribution networks remain key drivers of inflationary pressures.
Economists note that while the year-on-year improvement is encouraging, inflation remains dangerously elevated, far above the CBN’s target range of 6-9%. The persistence of high core inflation, which excludes volatile food and energy prices, suggests that underlying inflationary pressures have become entrenched in the economy and may require more structural solutions beyond monetary policy.
Sector-Specific Contributions to Inflation
The NBS data provides detailed insights into how different sectors contribute to overall inflation:
- Food and non-alcoholic beverages remain the dominant driver at 8.89%
- Restaurants and accommodation services contributed 2.87%
- Transport added 2.37%
- Housing, water, electricity, gas and other fuels accounted for 1.87%
- Education services contributed 1.38%
- Health added 1.35%
- Clothing and footwear contributed 1.12%
These figures highlight how inflationary pressures are widespread across both essential and discretionary spending categories, affecting virtually all aspects of household budgets.
Looking Ahead: Prospects for Second Half of 2025
The twelve-month average inflation rate stood at 26.58% in June 2025, down from 30.00% in June 2024, suggesting a gradual easing of price pressures over the medium term. However, several factors could influence inflation trends in the coming
Agricultural Seasonality: The ongoing rainy season could improve agricultural output and moderate food inflation, though this depends on favorable weather conditions and security situations in key farming regions.
- Exchange Rate Stability: The performance of the naira and its impact on imported inflation will remain crucial, particularly for urban consumers and manufacturing sectors reliant on imported inputs.
3.Energy Prices: Any adjustments to fuel subsidy regimes or changes in electricity tariffs could significantly impact overall price levels.
4.Fiscal Policy: Government spending patterns and borrowing plans could influence monetary conditions and inflationary expectations.
- Global Commodity Prices: Movements in international food and energy prices will continue to affect domestic inflation through import channels.
Cautious Optimism with Significant Risks
While the two consecutive months of declining annual inflation provide some grounds for optimism, the acceleration in monthly price increases and persistent core inflation suggest that Nigeria’s battle against inflation remains far from won. The dramatic variations across states and sectors highlight the complex, multifaceted nature of inflationary pressures in Africa’s largest economy.
Policymakers face the challenging task of maintaining monetary discipline while addressing the structural constraints that continue to drive prices upward. For consumers and businesses, the modest slowdown in inflation offers little immediate relief from the high cost of living and doing business that has characterised Nigeria’s economic landscape in recent years.
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