Inflation May Drop To 27% By December — Report

Nigeria’s headline inflation rate is projected to average 30.5% year-on-year in 2025 and settle at 27.1% by December 2025.

The most recent NESG-Stanbic IBTC Business Confidence Monitor report supports the premise that, despite the possibility of unexpected negative shocks to petrol prices, headline inflation is anticipated to remain steady in September 2025 but decline to 30.0% from September 2025.

The economy of Nigeria is still plagued by inflation, with rising fuel costs and currency depreciation driving up costs in all sectors.

The report stated, “We expect headline inflation to remain sticky in 9M: 25 but settle below 30.0 per cent from September 2025 as high petrol cost gets smoothened out of the year-on-year headline inflation, barring any unexpected negative shocks to petrol prices.

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” This expectation, in addition to our prognosis on the USD/NGN pair, fiscal deficits, and food supplies, informs our forecast that the headline inflation may average 30.5 per cent y/y in 2025 and settle at 27.1 per cent by December 2025. “

In our opinion, this could prompt the Central Bank of Nigeria’s (CBN) Monetary Policy Committee to adopt a more accommodative monetary policy in the late 2025. A relatively lower headline inflation in H2: 24 should support consumer spending, and business activity should also improve as the impact of the government’s two-flagship policies (FX liberalization and fuel subsidy removal) subside.

“Overall, we estimate the Nigerian economy to grow by 3.5% y/y in 2025 from an estimated 3.2% y/y in 2024.

The anticipated easing of inflation is anticipated to have an impact on monetary policy as well. The Central Bank of Nigeria’s Monetary Policy Committee, in the terms of the report, may take a more accommodating stance in the middle of 2025, possibly by cutting interest rates to encourage economic growth.

Additionally, the report added that the demand for seasonal holidays contributed to the business’ performance in December 2024.

The Current Business Performance Index, which measures economic activity across sectors, rose to + 0.77, an improvement from -2.74 recorded in November.

This was the first positive reading since September 2024, indicating a modest increase in business activity.

However, the performance across sectors was uneven. With a net balance of + 13.93, agriculture came out as the sector with the best-performing sector, helped by increased harvest activity and increased produce demand.

Non-manufacturing industries also showed resilience, recording a net balance of + 5.80. In contrast, the manufacturing, trade, and services sectors faced significant challenges.

The Future Business Expectation Index, which reflects optimism about future business conditions, settled at + 28.61 in December 2024, down slightly from + 33.17 in November.

Source: Channels TV