The Federal Government is targeting single-digit inflation before the end of 2027, with the aim of creating conditions for lower interest rates and making borrowing more affordable for businesses and households.
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, disclosed this on Monday at the Nigerian Economic Summit in Abuja, saying persistent price increases continued to undermine the benefits of the government’s economic reforms.
Oyedele said the administration wanted household incomes to rise faster than prices, arguing that a sustained decline in inflation could help reduce borrowing costs and improve access to capital.
“What we have announced is before the end of next year, we want to bring inflation to low single digits so that it can create a condition for single-digit interest rates,” he said.
The target represents an ambitious objective for the government, with the minister acknowledging that high borrowing costs remain a significant constraint on economic activity.
High interest rates weigh on businesses
Oyedele said borrowing costs approaching 30 per cent remained a major challenge for businesses seeking to finance operations, expand production or invest in new projects.
High interest rates increase the cost of servicing loans and can discourage companies from borrowing to purchase equipment, hire workers or expand their facilities.
Small and medium-sized enterprises may be particularly affected because they often have fewer financing options and may face higher borrowing costs than larger companies.
Lower inflation could create room for monetary easing if price pressures decline sustainably. However, interest rates are influenced by monetary policy decisions, inflation expectations, exchange-rate conditions, liquidity and broader financial risks.
The government’s inflation target should therefore be distinguished from a guaranteed timeline for interest-rate reductions. Achieving single-digit inflation would not, by itself, ensure that lending rates immediately fall to single digits.
Government points to reform savings
The minister said adjustments to foreign exchange arrangements and the removal of the petrol subsidy had generated savings that enabled the government to support salary increases, pension payments, retirement benefits and subsidised credit for small businesses.
He described the high cost of interest payments as part of the price paid to achieve economic stability, while arguing that the next priority should be to ensure Nigerians experience more tangible benefits from the reforms.
The extent to which those benefits reach households will depend on changes in prices, real incomes, employment opportunities and access to essential services.
For businesses, lower and more predictable inflation can make investment planning easier by reducing uncertainty about input costs, selling prices and future financing requirements.
Achieving the target will require sustained progress
Bringing inflation into single digits would require a sustained moderation in price pressures rather than a temporary decline.
Food supply, transport costs, energy prices, exchange-rate movements and the cost of distributing goods all affect the prices paid by consumers.
The government’s target will therefore depend on a combination of macroeconomic stability, improved supply conditions and measures that support productivity.
The Central Bank of Nigeria will also remain central to the inflation outlook through its monetary policy decisions.
Oyedele’s announcement establishes the government’s stated ambition for the end of 2027. Whether that target can be achieved will depend on economic conditions and the effectiveness of measures taken to bring inflation down without undermining output and employment.
