Nigeria's headline inflation rate slowed down to 23.18% in February, marking the first decline in 2025, according to data released by the National Bureau of Statistics on Monday. This decrease follows a Consumer Price Index (CPI) rebase and is attributed to lower petrol costs and a stable naira.

The decline in diesel and petrol prices, driven by increased output from Dangote Refinery, had a cascading effect on the broader economy, driving down costs for consumers and businesses alike. Diesel prices dropped by 33% to ₦1,000/liter, while petrol prices remained steady around ₦800+ per liter. Food inflation for February was 23.51%, down from 24.08% recorded in January.

Despite this slowdown, analysts believe that Nigeria's inflation is at an inflection point, following the CPI rebasing, and expect inflation to accelerate as soon as April. According to Basil Abia, co-founder of data and research firm Veriv Africa, "My outlook for 2025 in Nigeria in spite of the rebasing is an average rate of 31% for the year. So, expect worse monthly numbers deep into 2025." Abia attributed this expected acceleration to global economic factors, similar to how the pandemic affected Nigeria's economy in 2020.

The Monetary Policy Committee (MPC) in February held interest rates at 27.50% after assessing recent macroeconomic developments, including exchange rate stability and a gradual slowdown in fuel price increases, and the rebasing of the CPI index. This decision suggests that the Central Bank of Nigeria (CBN) is cautious about the potential impact of global economic factors on the country's inflation rate.

The implications of Nigeria's inflation rate on the economy and businesses cannot be overstated. A high inflation rate can erode purchasing power, reduce consumer spending, and increase the cost of doing business. As such, the CBN's ability to manage inflation and maintain a stable economy will be crucial in the coming months.

In conclusion, while Nigeria's inflation rate slowdown in February may seem like a positive development, analysts predict that it may be short-lived due to global economic factors. The CBN's decision to hold interest rates steady suggests that it is aware of the potential risks and is taking a cautious approach to managing the economy. As the year progresses, it will be essential to monitor Nigeria's inflation rate and its impact on the economy and businesses.