Banks raise savings rates, but Nigerians still struggle with high prices

By Chinwendu Obienyi

Nigerians are expected to continue experiencing weak purchasing power despite banks increasing savings interest rates in response to recent monetary policy adjustments, as inflation still far exceeds returns on deposits, according to an analysis done by Daily Sun on Tuesday.

This is coming after several deposit money banks (DMBs) adjusted their savings rates in response to changes in the benchmark policy rate set by the Central Bank of Nigeria (CBN).

In different updates sent by banks to their customers seen by Daily Sun, some commercial banks now offer savings rates of around 7–8 per cent annually, aiming to encourage deposits and support financial savings.

Specifically, Wema Bank, informed its customers that their savings interest rate has been updated to 7.95 per cent per year after the change in the apex bank’s monetary policy rate (MPR).

Listing its array of accounts, the bank said, “Savings Accounts (Tier 1–3), Open Wallet, Non-Individual Savings Accounts, Salary Savings Accounts, Purple Accounts and SMART Save Accounts

now earn 7.95 per cent interest per year.

Furthermore, WTA Individual Accounts and WTA Non-Individual Accounts now earn 3.975 per cent per annum. The more you save, the more you earn.

To continue earning interest on your savings, maintain a positive savings balance and keep withdrawals or debit transactions to four or fewer per month”.

This means that if a customer saves N100,000 in a year, he or she is expected to earn roughly about N7,950 before tax, assuming the rate stays the same and interest is calculated normally.

However, if a customer exceed the withdrawal or debit transaction limit, the bank may not pay interest for that month.

Speaking to Daily Sun, some bank customers who appeared not too excited about the banks’ update on savings rate, noted that the increase remains well below the country’s inflation rate, leaving real returns negative for many households.

According to the National Bureau of Statistics (NBS), the country’s headline inflation eased slightly to 15.06 per cent year-on-year in February 2026, down marginally from 15.10 per cent in January. While the decline suggests price pressures may be stabilizing, consumer prices rose 2.01 per cent on a month-on-month basis, reversing the 2.88 per cent contraction recorded in January and signaling a renewed increase in short-term price momentum.

Food inflation, which carries a heavy weight in the country’s consumer basket, also accelerated. The food index rose 12.12 per cent year-on-year in February, compared with 8.89 per cent in January, representing a significant increase in price pressures for essential goods. On a monthly basis, food prices surged 4.69 per cent, rebounding from a 6.02 per cent decline the previous month.

Vice Chairman, Board of Directors at Highcap Securities, David Adonri, said, “The rise in food prices is particularly significant for Nigerian households, where food expenses account for a large share of total spending. So we have seen higher costs for staples, transportation and energy continue to strain disposable income.

This however is limiting the ability of households to increase savings or consumption. So the updates about savings rate is not something we should be jumping up or rejoicing about”.

Sharing the same sentiment, National Chairman, Progressive Shareholders Association of Nigeria, said that while banks’ efforts to raise savings rates could help attract deposits, the impact on household wealth remains limited as inflation continues to erode purchasing power.

“With inflation numbers that came in yesterday, it is still well above average savings yields and depositors are effectively experiencing negative real returns. Even though nominal interest earnings are increasing slightly, the value of those earnings is reduced by higher prices across the economy. For instance, the banks are saying customers should limit debits, while such measures may promote saving behavior, many households facing rising living costs may struggle to keep funds in savings accounts”, Okezie stressed.

Recent policy tightening by the CBN has been aimed at stabilizing prices and managing inflation expectations. Higher policy rates typically lead to increased lending and deposit rates across the banking system. However, the transmission to consumer savings rates is often slower and less pronounced compared with borrowing costs.

Okezie added that improvements in real purchasing power may take time. “Nigeria has experienced several years of elevated price growth, meaning household budgets remain under pressure even if inflation begins to slow”, he said.

Looking ahead, the trajectory of consumer purchasing power will largely depend on whether inflation continues to decline and whether income growth can keep pace with rising living costs. Until then, higher savings rates alone are unlikely to fully offset the effects of persistent inflation on consumers.