Nigeria’s inflation rate is finally showing promising signs of moderation. After reaching a historic high of 34.8 percent in December 2024, inflation has gradually dropped to 20.12 percent by August 2025, marking the lowest level in more than two years. This improvement became clearer following the government’s revision of inflation data in January 2025, which offered a more precise picture of price trends amid ongoing economic reforms.
Economists have dubbed the inflationary period under President Bola Tinubu as “Tinubuflation,” a term reflecting the inflationary pressures linked to the removal of fuel subsidies, the unification of exchange rates, and the implementation of tighter monetary policies.
“The steady decline in inflation suggests that these policy interventions are starting to take effect. Price fluctuations are stabilizing, the naira is strengthening, and foreign investors are gradually returning to Nigeria’s local debt market after a lengthy hiatus.”
Despite these positive trends, many Nigerians continue to face economic hardships. The World Bank projects that poverty will rise to 61 percent in 2025, with nearly 139 million people living on less than $3 per day-up from 129 million the year before. The combination of slow economic growth and persistent inflation since 2019 has severely eroded purchasing power, a result of both past policy missteps and external economic shocks.
Findings from a recent study at Covenant University, titled “Effect of Fiscal and Environmental Sustainability Shocks on Macroeconomic Dynamics in Nigeria: A DSGE Perspective,” shed light on this situation. The research indicates that while economic shocks have strong immediate effects, their impact lessens over time as the economy adjusts.
This insight mirrors current realities: inflation is easing, yet poverty remains stubbornly high because the consequences of earlier shocks continue to affect livelihoods. The study underscores the importance of focused government social welfare initiatives to speed up recovery and reduce hardship more effectively.
In summary, Nigeria’s economic reforms are beginning to bring stability. Although progress is visible, it will take several months before the benefits are widely experienced by the population. The critical question remains whether this initial economic calm will translate into real improvements for everyday Nigerians or if the challenges linked to reform will endure longer than expected.
Oluwatobi Ojabello, senior economic analyst at BusinessDay.
