Why Inflation in Nigeria Keeps Rising and What It Means for Your Finances

posted on Sep 19, 2025

Understanding the drivers of inflation and how Nigerians can adapt

 Why Is Inflation So High in Nigeria?

If you walk into a market today, you’ll quickly notice that the same ₦5,000 you spent last year barely covers half of your basket now. Inflation is the reason, and it is being felt across every Nigerian household.

But what drives this surge?

1. Exchange rate pressure – The naira’s depreciation against the dollar has been a major factor. Nigeria imports a large share of its goods, so when the dollar rises, prices follow.
2. Fuel and energy costs – With subsidy removals and higher global oil prices, the cost of fuel and electricity is passed on to transport, food, and manufacturing.
3. Food insecurity – Insecurity in farming regions and poor logistics mean less food supply, raising prices further.
4. Policy instability – Sudden changes in government policy or monetary restrictions often cause ripple effects on businesses and consumers.

The result is clear: inflation erodes purchasing power. Salaries remain stagnant while essentials like rice, fuel, and rent continue to climb.

How Nigerians Are Coping

With income falling short of expenses, many Nigerians are turning to credit for short-term relief. Bank loans, payday loans in Nigeria, and even quick online loan applications offer temporary breathing space. For instance, online banks now allow borrowers to apply digitally for small loans that cover school fees, medical bills, or food expenses.

However, while loans provide relief, they can be risky if not managed wisely. Taking a bank loan during inflation means repayment could feel heavier if prices keep rising. That’s why experts recommend using loans for productive purposes — like starting a small business — rather than covering day-to-day costs.

Preparing for Tomorrow

Inflation is more than a temporary headache; it shapes your long-term financial stability. If you only focus on today, you risk leaving your savings vulnerable.

In our next article on how inflation affects savings and retirement, we’ll explore how the money you’re putting away today might lose value tomorrow — and what you can do to fight back.