Nigeria’s headline inflation slowed to 15.1 percent in January from 15.2 percent in December, according to data from the National Bureau of Statistics, continuing a gradual easing trend seen in recent months.
Analysts at CardinalStone and CSL Stockbrokers project inflation could moderate further in February, with estimates ranging between 14.1 percent and 14.4 percent, supported by lower food prices and relative exchange rate stability.
On the surface, the trend suggests the worst of the price surge may be over. But as the country edges closer to an election cycle, the bigger question is whether the slowdown can hold.
Election years in Nigeria have historically been associated with higher public spending. More spending often means more money circulating in the economy. And when money supply rises too quickly without matching production, prices tend to follow.
Some economists, however, argue that the current policy environment is more disciplined than in previous cycles.
Wole Adelokun, Partner, Strategy & Customer Solutions, KPMG, believes election-related spending may not significantly reverse the gains already recorded.
While election spending is expected to increase, Adelokun does not believe it will significantly reverse the inflation trend.
“Will the election have a significant impact on stopping inflation from declining? I don’t think so,” he said.
He argues that the current Central Bank leadership is more disciplined than in past cycles, with a focus on zero-deficit financing and tighter control of money supply.
“In the past, you had the CBN playing the role of printing money. But the current CBN authority is focused on zero-deficit financing,” he explained
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Unlike previous periods when direct monetary financing expanded liquidity, the CBN is now closely monitoring cash in circulation and prepared to withdraw excess funds from the system if necessary.
His argument rests on tighter monetary control. In simple terms, the Central Bank is no longer directly financing large government shortfalls as aggressively as before, and is prepared to withdraw excess cash from the system if liquidity begins to rise too quickly.
He also notes that the biggest inflation shocks may already have passed.
“The errors were when we had accelerated inflation because of subsidy removal and the exchange rate impact that led to imported inflation. I think we’re out of that.”
The removal of fuel subsidies sharply increased transport and energy costs, while exchange rate depreciation made imported goods more expensive, a combination that drove inflation higher. With the naira relatively more stable and those initial shocks absorbed, price pressures have eased.
Yet not all analysts see the current moderation as firmly rooted.
Paul Alaje, chief economist at SPM, says part of the slowdown reflects technical factors rather than a deep structural shift.
“The moderating inflation is not only about slower price growth but mainly about base year effect and FX stability,” he said.
The base year effect refers to how inflation is calculated; current prices are compared with prices from a year earlier. When last year’s prices were unusually high, the annual rate can appear lower even if costs remain elevated in absolute terms.
Alaje also warned that election-related spending could still alter the picture.
“For now, inflation will appear moderate until election spending starts. This will affect the money supply,” he said.
When asked whether a sustained disinflation trend is forming, he responded cautiously:
“Gradually, yes, but marginally in the real sense.”
In other words, inflation is slowing, but the improvement is small and could easily be tested.
For businesses and investors, this is not a victory lap, but it is a small relief. The next few months matter.
If the naira holds steady and the Central Bank keeps a tight watch on how much money is circulating, inflation could continue to slow gradually. But if election spending accelerates and more cash floods the system without firm control, price pressures could creep back.
Nigeria has seen inflation slow before, only for fresh shocks to push it higher again. What will determine whether this moment turns into lasting stability is not just food supply or FX strength, but policy discipline in an election season that will test it.
