AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
Part of the guideHow to save in Nigeria when inflation is high
The short answer
Your real return is what your savings earn after tax and after inflation: (1 + after-tax rate) ÷ (1 + inflation) − 1. With headline inflation at 14.63% in September 2026, a savings account at 6.9% loses about 7% of its buying power over a year after tax, a 15% fixed deposit loses about 1%, and a 364-day Treasury bill held to maturity gains about 2%. If you mostly spend on food, where inflation was 19.59%, every option looks worse.
Every rate you see advertised is a nominal rate. It tells you how many more naira you will have, not how much more you can buy. In a country where prices have risen fast for years, that difference decides whether saving is building wealth or slowly losing it. This article gives you the tool; our guide to saving in Nigeria when inflation is high uses it to compare every option.
The formula and why the shortcut misleads
The exact formula is:
Real return = (1 + after-tax rate) ÷ (1 + inflation rate) − 1
Many people use the shortcut "rate minus inflation". At low numbers the two give similar answers. At Nigerian numbers they drift apart, and the shortcut overstates both gains and losses. For a fixed deposit at 13.5% after tax with inflation at 14.63%, the shortcut gives −1.13%; the exact formula gives −0.99%. Small here, but larger as the gap widens.
Three inputs, three traps
- Use the after-tax rate. Banks deduct 10% withholding tax from deposit interest, so 15% becomes 13.5%. FGN bonds are exempt. Our article on withholding tax on interest lists what is taxed.
- Use the effective yield, not a discount rate. A Treasury bill quoted at 15.85% is a discount rate; the effective yield is about 18.8% before tax. See how to buy Treasury bills.
- Use the inflation rate that matches your spending. Headline inflation is an average. Your own may be higher or lower.
The numbers as of October 2026
The National Bureau of Statistics reported headline inflation of 14.63% in September 2026, down from 15.39% in August and the fourth monthly fall in a row. Food inflation was 19.59%, core inflation (excluding farm produce and energy) 12.95%, urban inflation 15.64% and rural 12.46%. Here is what that means for common options over a year:
| Option | Headline rate | After tax | Real return at 14.63% |
|---|---|---|---|
| Bank savings at the CBN floor (30% of a 23% MPR) | 6.90% | 6.21% | about −7.4% |
| Flexible savings pot (example rate) | 12.00% | 10.80% | about −3.3% |
| Fixed deposit | 15.00% | 13.50% | about −1.0% |
| FGN Savings Bond, 3-year (October 2026) | 14.07% | 14.07% (exempt) | about −0.5% |
| 364-day Treasury bill, 15.85% discount | about 18.8% yield | about 16.9% | about +2.0% |
| Cash at home or a current account | 0% | 0% | about −12.8% |
In money: ₦1,000,000 in a fixed deposit grows to ₦1,135,000 after tax. Goods that cost ₦1,000,000 a year ago now cost about ₦1,146,300. Measured in last year's prices, your deposit is worth about ₦990,142.
Small gaps compound
A real return of −1% a year sounds harmless. Over five years at the same rates, ₦1,000,000 in that fixed deposit would buy what about ₦951,000 buys today. A savings account losing about 7.4% a year would leave buying power of about ₦682,000. A Treasury bill gaining 2% a year would lift it to about ₦1,104,000. The ranking that looks marginal in one year becomes a gap of more than ₦400,000 over five.
Monthly versus yearly figures
The NBS also publishes month-on-month inflation, which is more volatile. In September 2026 headline prices rose just 0.06% on the month, and food prices fell 1.55%, while core prices rose 1.11%. A single quiet month does not mean prices have stopped rising. For savings decisions, use the year-on-year figure, which matches the one-year horizon of most rates.
Your personal inflation rate
The headline figure weights everything the average household buys. If most of your budget goes on food, as it does for many lower-income households, your inflation is closer to the 19.59% food figure. If you live in a city, it is closer to 15.64%. The same fixed deposit gives very different real results:
- At rural inflation (12.46%)
- Fixed deposit about +0.9%; Treasury bill about +4.0%
- At headline inflation (14.63%)
- Fixed deposit about −1.0%; Treasury bill about +2.0%
- At urban inflation (15.64%)
- Fixed deposit about −1.9%; Treasury bill about +1.1%
- At food inflation (19.59%)
- Fixed deposit about −5.1%; Treasury bill about −2.2%
A rough way to find your own rate: compare what your regular monthly shop, rent and transport cost now against the same items a year ago. If your costs rose 20%, use 20%.
What the policy rate tells you
The CBN cut the Monetary Policy Rate from 26.5% to 23% on 22 September 2026. Even after the cut, the policy rate sits well above inflation, a real policy rate of about +7.3%. That gap is why Treasury bills and some term deposits can still offer a positive real return. When the gap narrows, savings rates usually follow. Treasury bill stop rates fell by 70 to 80 basis points at the first auction after the cut, and deposit rates tend to follow over the following weeks.
Inflation also moves. The figures above use one year of past prices; next year's inflation could be higher or lower. Treat any real-return calculation as a guide for comparing options today, not a forecast.
A practical note on comparing like with like: make sure every rate covers the same period. A fixed deposit quoted at 15% for 90 days earns about a quarter of that over the 90 days, not 15%. Treasury bill yields, fund yields and deposit rates should all be expressed as annual figures before you put them into the formula, and the inflation figure should be the latest year-on-year rate.
How to use real returns in practice
- Keep only what you need at short notice in low-paying accounts. The emergency fund is the one place where a negative real return is an acceptable price for access; see how big it should be.
- For money with a date months away, aim for the highest after-tax rate you can lock until that date.
- Recheck every quarter when the NBS publishes new inflation figures, usually mid-month.
- Do not chase a positive real return by taking risks you do not understand. A scheme promising far above Treasury bill rates is more likely to lose your money than beat inflation.
- For long goals, savings alone rarely beat inflation over many years; consider diversified investments alongside them, accepting they can fall in value.
Where Pryme fits
Pryme's Savings Boxes (Nigeria-only, in naira) show the rate in the app before you commit, so you can run this formula on each Box: take the rate shown, deduct any tax that applies, and divide by one plus the latest inflation figure. Rates can change, and any target return is not a guarantee.
To see how each option fits a plan by time horizon, read the full savings guide.
Questions people ask
How do I calculate real interest rate in Nigeria?
Divide one plus your after-tax interest rate by one plus the inflation rate, then subtract one. For a 13.5% after-tax rate and 14.63% inflation: 1.135 ÷ 1.1463 − 1 = about −1.0%.
Which savings beat inflation in Nigeria now?
At September 2026 inflation of 14.63%, a 364-day Treasury bill held to maturity gives about +2% after tax. Ordinary savings accounts and most fixed deposits fall short. Results depend on the rate you get and your own inflation.
What is the current inflation rate in Nigeria?
The NBS reported headline inflation of 14.63% for September 2026, with food inflation at 19.59% and core inflation at 12.95%. Figures are published monthly, usually mid-month.
Why is my savings losing value?
Because prices are rising faster than your after-tax interest. Money in a current account or at home loses about 12.8% of its buying power a year at 14.63% inflation.
Is a negative real return always bad?
Not for your emergency fund, where access matters more than return. For money you will not need for months or years, look for options that roughly match or beat inflation after tax.
Sources
- NBS CPI, September 2026: inflation slows to 14.63% (Nairametrics) · accessed Oct 2026
- Arise News: CBN cuts MPR to 23% from 26.5% (MPC, 22 September 2026) · accessed Oct 2026
- CBN circular on savings deposit rate at 30% of MPR (via Blueprint) · accessed Oct 2026
- Nairametrics: NTB auction of 7 October 2026, 364-day stop rate 15.85% · accessed Oct 2026
- Nairametrics: NTB stop rates fall after the September 2026 rate cut · accessed Oct 2026
- Nairametrics: FGN Savings Bond October 2026 offer · accessed Oct 2026
- BusinessDay: why withholding tax was deducted from savings interest · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.