Nigeria’s inflation crisis shows no signs of abating in 2025. Fresh data reveals that year-on-year headline inflation climbed to 24.23% in March, up from 23.18% in February and 24.48% in January. This marks yet another month of worsening price pressures, squeezing households and businesses alike. The figures paint a grim picture: Nigeria’s economy remains trapped in a vicious cycle of rising costs, with food prices leading the charge and regional disparities widening.
Breaking Down the Numbers
1. Headline Inflation: A Persistent Climb
Nigeria’s inflation trajectory in early 2025 has been erratic but trending upward. After peaking at 24.48% in January, it dipped slightly in February (23.18%) before resuming its ascent in March (24.23%). Economists had hoped for a sustained decline following the Central Bank of Nigeria’s (CBN) aggressive interest rate hikes in late 2024. Instead, structural weaknesses—poor agricultural output, a weakening naira, and high energy costs—continue to fuel price surges.
2. Urban vs. Rural Divide
The pain of inflation is not evenly distributed. Urban areas are bearing the brunt, with inflation hitting 26.12% in March, up from 25.15% in February. This reflects higher transportation costs, expensive housing, and pricier services in cities like Lagos and Abuja. Meanwhile, rural inflation, though lower at 20.89% in March (up from 19.89% in February), is still devastating for farming communities grappling with rising fertilizer costs and insecurity disrupting food production.
3. Food Inflation: The Biggest Burden
Food remains the most volatile component of Nigeria’s inflation basket. The food index surged to 26.12% in March, up from 25.15% in February, far outpacing general inflation. Staple items—rice, garri, beans, and cooking oil—have become luxury goods for many.
- Oyo State recorded the highest food inflation at 34.41%, driven by supply chain disruptions and post-harvest losses.
- At the other end, Bayelsa had the lowest food inflation at 9.6%, likely due to its relative self-sufficiency in fish and cassava production.
The disparity underscores Nigeria’s uneven agricultural resilience. While some states benefit from local food networks, others rely on expensive imports or are plagued by banditry, which disrupts farming in the north.
4. Regional Disparities: Kaduna in Crisis, Akwa Ibom Stable
Inflation is a geographically fragmented crisis.
- Kaduna State has the highest inflation rate at 33.3%, a consequence of its proximity to conflict-ridden Northwest zones where armed groups frequently attack farms and markets.
- Akwa Ibom (12.8%) and Bayelsa (9.6%) enjoy relatively stable prices, partly due to lower dependence on imported food and better local supply chains.
This North-South divide highlights how insecurity and logistics bottlenecks distort pricing across the country.
Why Is Inflation Still Rising?
1. A Weaker Naira and Import Dependence
Despite the CBN’s efforts to stabilize the currency, the naira remains volatile, trading at around ₦1,532/$1 in the parallel market as of March 2025. Nigeria’s heavy reliance on imported food and fuel means any exchange rate weakness translates directly into higher prices.
2. Fuel Subsidy Aftermath
The full removal of petrol subsidies in 2023 continues to ripple through the economy. Transportation costs remain elevated, pushing up the prices of goods nationwide. Diesel, critical for businesses and farming, remains prohibitively expensive at ₦1,200 per liter, further straining production costs.
3. Security Challenges Disrupting Agriculture
Banditry in the Northwest and Middle Belt has forced many farmers to abandon their fields. States like Kaduna, Zamfara, and Niger—Nigeria’s food belt—are now epicenters of violence, leading to reduced harvests and higher food prices.
4. Policy Missteps and Monetary Tightening
The CBN has raised interest rates to 22.75% in early 2025, but the impact on inflation has been muted. Critics argue that without fixing structural bottlenecks—poor infrastructure, energy shortages, and insecurity—rate hikes alone cannot tame inflation.
5. Money Supply and Deficit Finance
Increased money supply, often associated with government deficits, can lead to higher demand and prices if not matched by increased production, according to some economists.
What Can Be Done?
1. Boost Agricultural Productivity
- Invest in storage facilities to reduce post-harvest losses.
- Provide security for farmers to encourage planting.
- Expand irrigation to mitigate climate shocks.
2. Strengthen the Naira
3. Targeted Social Interventions
- Expand cash transfers to the poorest households.
- Subsidise fertilisers and seeds for smallholder farmers.
4. Improve Data-Driven Policymaking
- Enhance inflation tracking to detect regional price surges early.
- Coordinate fiscal and monetary policies more effectively.
Conclusion: A Long Road Ahead
Nigeria’s inflation crisis is multifaceted and deeply entrenched. While monetary policy can help, lasting solutions require fixing supply-side constraints, improving security, and reducing import dependency. Without these measures, inflation will remain a persistent scourge, eroding incomes and pushing more Nigerians into poverty.
For now, the numbers tell a worrying story: Prices are still rising, and relief is not yet in sight.
