Nigeria’s inflation charge is on target to gradual subsequent 12 months after extending its disinflation run in November, at the same time as economists warn of a short lived break within the easing cycle in December as favorable base results start to fade.
Headline inflation slowed for an eighth straight month to 14.45 p.c in November, down from 16.1 p.c in October, in accordance with knowledge launched Monday by the Nationwide Bureau of Statistics (NBS). The studying got here in barely under the median estimate of economists surveyed by BusinessDay, underscoring the tempo at which worth pressures have eased for the reason that begin of the 12 months.
The slowing inflation pattern strengthens the case for a charge reduce on the Central Financial institution OF Nigeria (CBN)’s financial coverage assembly subsequent February, bringing a lot wanted reduction to companies choked by excessive rates of interest. The Financial Coverage Committee (MPC) left the benchmark rate of interest unchanged at 27 p.c at its final assembly however has signalled plans to start an easing cycle as inflation continues to decelerate.
The November studying additionally locations inflation broadly consistent with the federal authorities’s year-end goal of 15 p.c for 2025, a purpose that many analysts had beforehand described as formidable following final 12 months’s surge in costs pushed by forex depreciation, gasoline subsidy removing and meals provide shocks.
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Analysts say the November slowdown displays bettering home provide circumstances and relative forex stability. In keeping with Lagos-based Meristem, inflationary pressures continued to melt on the again of the lingering affect of the harvest season on meals costs, mixed with a extra secure naira within the official foreign-exchange market.
Costs declined throughout a variety of key staples, together with maize, sorghum, paddy rice and soybeans, reinforcing the downward pattern. Over the identical interval, the naira appreciated 1.45 p.c month-on-month, averaging N1,443.85 per greenback in November, in contrast with N1,465.04 in October.
That backdrop helped push meals inflation right down to 11.08 p.c from 13.12 p.c, whereas core inflation, which strips out risky meals and power objects, eased to 18.04 p.c from 18.69 p.c the earlier month, the information confirmed.
The disinflation pattern helps the goals of the federal government’s 2025 fiscal plan, dubbed the ‘Price range of Restoration,’ which goals to stabilise the financial system by slicing inflation from above 34 p.c to round 15 p.c–16 p.c, alongside boosting development and anchoring the alternate charge close to N1,500 per greenback. A number of of these targets have largely materialised.
Nonetheless, economists warning that a good portion of the obvious progress displays statistical results moderately than an entire elimination of worth pressures.
Nigeria rebased its Shopper Value Index (CPI) earlier this 12 months, shifting the bottom 12 months to 2024 and updating consumption weights. The methodological change resulted in a pointy statistical drop in headline inflation from about 34.8 p.c in December 2024 to 24.48% in January 2025
Non permanent uptick in December
Because the comparability interval rolls ahead, analysts count on the affect of that low base to fade, setting the stage for a short lived uptick in December’s year-on-year determine.
“There’s scope for a reversal within the headline print in December,” analysts at CardinalStone mentioned in a observe. “The introduction of the 2024 base 12 months has created an unusually low comparability level, which might mechanically elevate the headline studying to about 32.07 p.c in December 2025, earlier than normalising from January 2026.”
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Economists at Cordros Capital echoed that view, saying the anticipated spike would largely mirror arithmetic moderately than renewed inflationary momentum. In its 2026 outlook, the agency mentioned the CPI reset might make worth pressures seem worse than they’re, at the same time as underlying month-to-month traits stay subdued.
“The year-on-year quantity will look elevated as a result of the bottom is artificially low,” Cordros mentioned. “Nevertheless, we count on the disinflation pattern to renew after a quick uptick in December.”
Cordros forecasts common inflation of 16.3 p.c in 2026, with a year-end charge of 14.7 p.c, as tighter financial coverage and improved provide circumstances proceed to weigh on costs.
Bismarck Rewane, chief government officer of Monetary Derivatives Firm, mentioned inflation is cooling throughout a number of African markets however will stay in double digits in nations together with Nigeria, Egypt, Sudan, Ethiopia, Angola, Malawi and Zimbabwe. He expects Nigeria’s common inflation charge to ease to about 14.9 p.c in 2026.
“Inflation is predicted to reverse upward in December as base results fade,” Rewane mentioned on the 18th Alpha Morgan financial evaluation on Wednesday. “For Nigeria and Egypt, a shift towards extra orthodox financial coverage frameworks will help disinflation in 2026.”
Single-digit inflation on the playing cards
Different economists are extra optimistic about inflation charge subsequent 12 months.
Ayo Teriba, chief government officer of Financial Associates, mentioned inflation might fall into single digits as early as January 2026, as post-festive demand normalisation additional cools costs following the seasonal spending surge related to December.
Charlie Robertson, a frontier and rising markets economist, mentioned Nigeria’s inflation trajectory is already according to single-digit ranges, regardless of the anticipated volatility within the year-end knowledge.
“It’s good to see inflation right down to 14 p.c,” Robertson mentioned in a submit on X. “Authorities will wrestle to elucidate why base results all of the sudden make the December quantity bounce. In actuality, Nigeria is already trending at single-digit inflation.”
