On paper, Nigeria’s inflation story is improving, as seen from its trajectory over the past 16 months. At 15.06 per cent, the figure marks a steep decline from the 34.8 per cent recorded in December 2024. Later today, a new number from the National Bureau of Statistics for March will be released, probably confirming that the worst of the inflation surge is behind us.

But across Nigeria, the lived experience tells a different story. Transport fares are rising again. Petrol prices have surged, leading to prices rising or remaining stubbornly high.

For many households and small businesses, it feels less like relief and more like a pause before the next squeeze. This disconnect is not accidental but reflects the complex and often uneven way economic policy works. To begin with, falling inflation does not mean falling prices.

It simply means prices are rising more slowly. The cost of living, already elevated after the shocks of the past two years, remains high. What has changed is the speed of increase, not the level.

That distinction matters because for most Nigerians, the real question is not whether inflation is slowing but whether life is becoming more affordable. Right now, it is not because there is a new complication. Recent tensions in the Gulf region have triggered a fresh wave of cost pressures.

Fuel prices have risen sharply by over 50 per cent in some cases, while diesel costs have surged even higher. In a country without a reliable electricity supply, these increases are feeding directly into transport fares, logistics costs, and ultimately, the prices of goods across the economy. Even the World Bank has warned that this external shock is already pushing inflationary pressures back up, despite earlier progress.

Which raises an uncomfortable question: will the next inflation figure fully capture what Nigerians are already experiencing? There is often a lag between reality and measurement. Price data reflects averages over time, not the immediacy of daily adjustments.

So, while inflation may still appear to be moderating, households and businesses are already feeling the effects of a new price cycle. By the time we factor in an interest rate of 26.5 per cent, the restrictive stance of the monetary policy becomes clear. The goal is clear: lock in disinflation and stabilise the currency.

But in doing so, the burden of adjustment falls unevenly across the economy. For large firms, high interest rates are a constraint, but manageable. They have reserves, access to structured finance, and pricing power.

However, for small businesses, it is a different reality. They depend on credit not just for expansion, but for survival, restocking goods, paying suppliers, and managing cash flow. At current lending rates, borrowing becomes prohibitively expensive, threatening their operations.

The economy will continue to bear the brunt of these forces. Businesses under pressure do not hire aggressively. Wage increases are delayed or reduced.

Meanwhile, the earlier surge in inflation has already eroded purchasing power. Even as inflation falls statistically, real incomes remain weak. This is why the benefits of disinflation feel distant to Nigerians.

The pain of past inflation is still embedded in prices, while the present policy environment slows the recovery of incomes and opportunities. There is also a deeper structural shift taking place. High interest rates change not just the volume of credit, but its direction.

In Nigeria, banks already favour government securities and other low-risk assets. Elevated yields make those instruments even more attractive. This is why the current real interest rate of about 11.44 per cent makes investments in fixed-income securities quite attractive.

The result is a quiet but powerful reallocation: credit flows toward safety, not toward small, productive enterprises. Over time, this will reshape the economy. Large firms consolidate while smaller ones struggle to scale.

Informal businesses fall further outside the reach of finance, so business opportunities become more concentrated. This is the hidden effect of tight monetary policy: it stabilises prices, but it also redistributes opportunity. None of this suggests that the fight against inflation is misplaced.

On the contrary, inflation control is essential. Left unchecked, it would inflict even greater damage on households and businesses. But it does suggest that monetary policy alone cannot carry the burden of economic recovery.

As inflation slows down and as new shocks emerge, the question must evolve. It is no longer just about reducing inflation. It is about ensuring that stability translates into relief, a condition that requires complementary action.

In the current setting, following the conclusion of the banking sector recapitalisation, targeted credit support for small businesses, improved lending infrastructure, and disciplined fiscal policy have become imperative in the financial system to help to ease the pressure. Without