Nigeria’s Inflation Is Falling, But the Power Target Could Decide Whether Businesses Actually Feel Relief

Nigeria is getting two pieces of economic news that appear positive on paper but could have very different meanings for households and businesses.

Headline inflation fell from 15.91 per cent in June to 15.43 per cent in July, according to the National Bureau of Statistics. But food inflation moved in the opposite direction, rising to 20.31 per cent from 17.52 per cent in June. At the same time, the Federal Government is targeting the ability to reliably wheel 6,000MW of electricity by December.

The interesting question is whether these two developments can eventually work together to reduce the cost of doing business in Nigeria.

Lower Inflation Does Not Mean Food Is Getting Cheaper

The 15.43 per cent headline figure may sound like welcome news, especially compared with the 24.94 per cent recorded in July 2025. But it does not mean prices have fallen. It means prices are increasing more slowly overall.

Food tells a different story. Food inflation rose for the sixth consecutive month, reaching 20.31 per cent year-on-year in July. On a monthly basis, food inflation jumped to 5.56 per cent from 3.75 per cent in June. Prices of items including rice, tomatoes, onions, garri, beef, eggs and pepper increased during the month.

That explains why many Nigerians may not feel much relief from the headline inflation decline. For households, what matters most is often the weekly cost of food rather than what happens to the national inflation number.

Electricity Could Be the More Important Story for Businesses

This is where the government’s 6,000MW target becomes interesting.

Power Minister Joseph Tegbe says the government wants to generate and wheel 6,000MW before December, while also commissioning 20 transmission projects before the end of the year. Current generation is around 5,000MW, while the Transmission Company of Nigeria has about 8,500MW of wheeling capacity.

The key issue is not simply generating more electricity. Nigeria has previously had situations where electricity was available but could not be transmitted reliably to where it was needed. The government is therefore trying to address the transmission side of the problem as well.

A new upgrade at the Ijora transmission substation, for example, has increased its installed capacity from 90MVA to 230MVA, adding capacity for businesses and communities around one of Lagos’s major commercial corridors.

The Real Test Is the Cost of Production

This is where the two stories meet. If electricity becomes more reliable, businesses could spend less on diesel and generators. Lower operating costs could eventually reduce pressure on the prices of goods and services.

That could matter more to businesses than a small movement in the headline inflation rate.

But the 6,000MW target is only useful if the electricity actually reaches consumers consistently and at a cost businesses can afford. Generation, transmission and distribution all have to work together.

For now, Nigeria has one encouraging signal and one warning. Inflation is slowing, but food prices are still climbing. If the government can turn its power target into reliable and affordable electricity, it could attack one of the costs that keeps feeding Nigeria’s wider cost-of-living problem.