Addressing Inflation in Nigeria: A Holistic Approach to Stabilizing Prices and Restoring Economic Growth

Abstract

Official statistics indicate that Nigeria’s inflation rate stands at 24.48% as at January 2025, one of the highest in its history and significantly above the global average of 6.5%. This alarming rate has eroded purchasing power, increased poverty, and stifled economic growth. The primary drivers of inflation include soaring food prices, energy costs, currency depreciation, and structural inefficiencies in the economy. The Central Bank of Nigeria (CBN) has implemented monetary tightening measures, such as raising interest rates to 18.75%, but these efforts have yet to yield significant results. To address this crisis, this policy brief recommends a multi-faceted approach that combines monetary, fiscal, and structural reforms. Key recommendations include: i. Enhancement of the independence and transparency of the Central Bank of Nigeria to improve inflation targeting and restore public confidence, phase out fuel and electricity subsidies while implementing targeted social safety nets to protect vulnerable populations. ii. Government should investment in modern agricultural practices, infrastructure, and local manufacturing to reduce dependency on imports and stabilize food prices and adopt lessons from countries like Brazil, Turkey, and Israel, which have successfully combated hyperinflation through coordinated policy measures.