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Nigeria’s cooling inflation, strengthening naira, and rising investor confidence signal an economy regaining balance, as experts have advised that sustained recovery depends on ensuring growth translates into real gains for citizens, TEMITOPE AINA reports

Nigeria’s inflation rate continued its downward trend in October, easing to 16.05 per cent from 18.02 per cent recorded in September 2025. The decline followed sustained monetary policy easing and the positive impact of reforms introduced by the Central Bank of Nigeria, which strengthened the foreign exchange market and pushed the country’s external reserves to $46bn.

The easing cycle is expected to continue when the Monetary Policy Committee meets in Abuja on November 24 and 25 for its 303rd meeting. CBN Governor Olayemi Cardoso highlighted the influence of earlier MPC decisions, including improving the naira’s competitiveness in global markets and enhancing investor confidence.

Reacting to this, economic experts lauded the CBN and its reforms, but called for a sustainable recovery that would translate to the overall well-being of citizens nationwide. They advised the apex bank not to relent in ensuring that the gains in inflation decline, naira stability, among others, are felt positively by the larger masses.

The Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, for instance, noted that the drop in inflation was a significant win for the economy, but stressed that the welfare benefits are yet to be felt sufficiently.

He said, “The sharp moderation in Nigeria’s October 2025 inflation rate represents a significant win for macroeconomic stability. However, the full welfare benefits are yet to be sufficiently felt by households due to persistent structural constraints—especially in food supply, transportation, energy, housing, and essential services.

“To ensure that disinflation translates into real cost-of-living relief, Nigeria must undertake deliberate and sustained reforms across critical sectors. With coordinated monetary, fiscal, and structural policies, the current trajectory can be strengthened, broadened, and sustained.”

Macroeconomic restoration

According to the CBN, ongoing policy adjustments and structural reforms are beginning to permeate the wider economy, stabilising the naira and reducing lending rates as inflation moderates. The bank described the recent measures as part of a deliberate effort to restore macroeconomic stability after prolonged fiscal and external pressures.

It added that the emergence of lower lending rates signals the effectiveness of its reform path. The apex bank emphasised that aligning fiscal and monetary policies has become even more critical as digital finance and technological innovation reshape the financial system.

At its 302nd meeting on September 22 and 23, 2025, the MPC cut the benchmark interest rate by 50 basis points, from 27.5 per cent to 27 per cent. The reduction — the first since the tightening cycle began — contributed significantly to the drop in inflation and marked a turning point in the policy stance as inflationary pressures eased.

The National Bureau of Statistics confirmed the slowdown, stating in its Consumer Price Index report that inflation stood at 16.05 per cent in October, compared to 18.02 per cent in September. It noted that the year-on-year rate was 17.82 percentage points lower than the 33.88 per cent recorded in October 2024. The NBS said the month-on-month inflation rate rose to 0.93 per cent in October, up from 0.72 per cent in September, indicating that price increases during the month were slightly faster.

The steady moderation in inflation, combined with a stronger naira and rising foreign reserves, points to a more stable economic environment. The International Monetary Fund (IMF) relied on these indicators in projecting 3.9 per cent economic growth for Nigeria in 2025, alongside improved FX market stability.

Reforms introduced by the Cardoso-led CBN, alongside Federal Government policies aimed at boosting local production, reducing FX demand, and easing domestic prices, have supported macroeconomic recovery. Expectations now centre on the apex bank deepening FX reforms while fiscal authorities work to expand foreign-exchange earnings from oil, gas, and non-oil sectors.

State of the naira

The naira has strengthened by 3.5 per cent against the US dollar over the past 10 months, appreciating to N1,450/$ at the parallel market. This improvement, though modest, reflects coordinated efforts by the Federal Ministry of Finance and the CBN. At the start of the year, the currency traded at around N1,555/$, briefly weakening to N1,597/$ in April before firming up again. In October 2025, the naira touched N1,475/$ at the official market before adjusting to N1,500/$ yesterday at the parallel market.

CBN Governor Yemi Cardoso said the naira is “turning the corner” and becoming more competitive internationally. Speaking at the G-24 press briefing during the IMF/World Bank Annual Meetings in Washington DC, he stated that Nigeria’s economy has been restructured and now possesses stronger buffers against global shocks.

Cardoso said the naira’s improved competitiveness is helping to deliver positive trade balances, with several large businesses shifting from import dependence to exporting locally produced goods. He noted that Nigeria has achieved a trade surplus expected to remain at about six per cent of GDP. According to him, the economy is undergoing a “complete restructuring,” spurred by policies that encourage domestic production and discourage imports. He added that earlier reforms helped create resilience ahead of global headwinds.

Other stakeholders’ views

Director-General of WAIFEM and President of the Nigerian Economic Society, Dr. Baba Musa, urged the government to ensure that the projected 3.9 per cent growth in 2025 translates into better jobs, higher incomes, stronger productivity, and broader social welfare.

In his report titled “Nigeria’s Economic Outlook at a Turning Point,” presented at the 2025 IMF/World Bank Meetings, he said Nigeria’s economy in 2025 reflects “resilience, renewal, and strategic recalibration.”

Musa noted that while the IMF projects GDP growth of 3.9 per cent in 2025, rising to 4.2 per cent in 2026, the economy remains “cautiously optimistic yet structurally fragile.” He said Nigeria must maintain macroeconomic stability, deepen structural reforms, and ensure growth is inclusive. He added that policy consistency, human capital investment, and inclusive development will be essential for long-term competitiveness.

Musa highlighted global economic challenges, including slowing growth and rising geopolitical tensions, but said Nigeria has shown determination despite inflation, infrastructure gaps, and unemployment. He explained that recent policy actions — from fiscal consolidation to targeted monetary moves — have laid the foundation for sustainable expansion, but added that the real test is whether stability leads to meaningful socioeconomic gains.

He said growth is being supported by improved oil output, a resilient services sector, and better agricultural performance, aided by favourable weather and government interventions. According to him, the recent GDP rebasing offers a clearer picture of Nigeria’s economic potential, especially in digital services, modular refining, and creative industries.

Musa observed that inflation, though still high, is easing. He pointed to the decline to 18.02 per cent in September 2025 from 20.12 per cent in August, driven by better food supply, seasonal harvests, and targeted energy-sector policy actions. He described the CBN’s rate cut as a strategic effort to balance price stability with growth.

Improvements in investor sentiment, he said, are reflected in developments such as Shell’s HI Offshore Gas Project, which is expected to supply 350 million standard cubic feet of gas per day to Nigeria LNG.

Other steps

The CBN under Cardoso is diversifying FX sources to boost dollar inflows and improve access for manufacturers and retail users. Initiatives include strengthening diaspora remittances through new products, licensing additional International Money Transfer Operators, implementing a willing-buyer-willing-seller model, and ensuring timely access to naira liquidity for IMTOs. These measures have contributed to growing external reserves and shored up the naira.

Diaspora remittances, estimated at $23bn annually, remain a dependable FX source, while the CBN continues to explore other channels to sustain inflows and support macroeconomic stability.