Nigeria’s headline inflation rate continued its downward trajectory in December 2025, falling to 15.15%, marking a significant milestone in a 12-month disinflationary trend. While the moderation offers much-needed relief to Nigerian households, economic analysts and policymakers are highlighting a complex landscape defined by shifting statistical methodologies and a growing dilemma between consumer affordability and farmer profitability.
Easing Cost of Living Driven by Food Deflation
The primary driver of the December moderation was a sharp decline in food inflation, which fell to 10.84%. Notably, month-on-month food prices saw a contraction of 0.36%, the single most impactful factor in easing the cost-of-living pressures that have gripped the nation over the past year.
The Coordinating Minister for the Economy, Mr. Wale Edun, has indicated that the federal government is actively addressing the structural challenges required to sustain this momentum, focusing on stabilizing the agricultural value chain.
Statistical Credibility and Core Inflation Divergence
Despite the positive headline figures, the report highlights emerging concerns regarding the National Bureau of Statistics’ (NBS) recent changes to the methodology for computing the Consumer Price Index (CPI). These adjustments have sparked a “credibility gap” among investors and analysts, even though they have not materially altered the overall 12-month downward trend.
Furthermore, Core Inflation rose to 18.63% (up from 18.04% in November). This rise, occurring despite exchange rate stability, suggests persistent structural pressures in non-food sectors and highlights a potential inconsistency with broader macroeconomic fundamentals.
The Farmer’s Dilemma: Affordability vs. Viability
A critical policy challenge has emerged from the success of falling food prices. While consumers are benefiting, the sharp decline in returns is eroding the investment viability for farmers. With rising input costs for fertilizers and machinery, there is an urgent risk that agricultural producers may be discouraged from future planting, threatening long-term food security.
Key Inflation Highlights (December 2025)
- Headline Inflation: 15.15% (Extended 12-month decline)
- Month-on-Month Inflation: 0.54% (Down from 1.22% in November)
- Food Inflation: 10.84% (With a monthly price contraction of 0.36%)
- Core Inflation: 18.63% (Indicating upward pressure in services and energy)
- Primary Drivers: Food, housing, fuel, and transport account for 72% of total inflationary pressure.
Structural Constraints to Sustainable Stability
The report identifies several “legacy constraints” that continue to undermine long-term price stability:
- High energy and logistics costs.
- Insecurity impacting agricultural output in key regions.
- High interest rates and restricted access to credit.
- Prohibitive import duties on essential manufacturing inputs.
Strategic Recommendations
To ensure the current disinflation trend is sustainable, the following actions are recommended:
- For Government: Introduce a Minimum Guaranteed Pricing framework for staple crops to protect farmers, address insecurity in farming belts, and lower duties on production inputs.
- For NBS: Strengthen technical capacity and analytical rigour to rebuild public and investor confidence in statistical outcomes.
- Policy Coordination: Foster closer alignment between fiscal and monetary authorities to ensure that structural interventions complement monetary tightening without stifling local production.
Conclusion
The December 2025 data confirms that Nigeria is on a path toward moderation. However, the government must move swiftly to bridge the gap between consumer relief and producer profitability while ensuring the transparency of national economic data.
