Analysts are observing a gradual easing in Nigeria’s inflation rates, with projections suggesting a drop to between 17.0% and 17.9% year-on-year by November 2025. This encouraging forecast, shared by Stanbic IBTC analysts, is based on two critical factors: beneficial base effects from the high inflation levels recorded in 2024 and a stabilising macroeconomic environment.
If this projection materialises, Nigeria could maintain inflation below 20% by October, marking a significant milestone in the nation’s enduring battle against persistent price pressures that have affected the economy for years.
However, the path towards achieving a 17% inflation rate is expected to be complex. Short-term pressures are likely to continue through July and August, traditionally challenging months characterised by peak flooding in southern Nigeria and a lean agricultural season in the north. These seasonal variations typically result in food shortages and higher prices, with predictions indicating that July’s inflation could range from 21.71% to 21.88%, easing slightly to between 21.28% and 21.63% in August. Core inflation, excluding volatile food and energy prices, is expected to remain steady at 1.1% to 1.3% month-on-month, supported by stable energy costs and naira stability.
A notable factor arises in December 2025 due to technical aspects related to the rebasing of Nigeria’s Consumer Price Index (CPI). The rebased CPI indicated December 2024 inflation at 15.44% year-on-year, significantly lower than the 34.80% reported under the previous series. This discrepancy could lead to an artificial spike in December 2025 inflation to around 34% year-on-year if monthly inflation stabilises at -0.4%. Conversely, if the National Bureau of Statistics uses the pre-rebased figure of 34.8% for comparison, year-end inflation could settle at a more manageable 22-23%.
The Central Bank of Nigeria faces delicate policy decisions amidst these projections. The Monetary Policy Committee is likely to keep rates steady during its July meeting, with potential easing only occurring in September if inflation trends confirm sustained moderation. Analysts anticipate cumulative rate cuts of 150-200 basis points towards the end of 2025, following an aggressive 875 basis point hike in 2024. The MPC may first indicate its dovish shift by narrowing the asymmetric corridor around the Monetary Policy Rate (MPR) from its current configuration of +500/-100 basis points.
Recent inflation data brings cautious optimism, with June 2025 figures revealing a second consecutive monthly decline to 22.22% year-on-year from 22.97% in May. Nevertheless, underlying pressures remain apparent, as month-on-month inflation accelerated to 1.68% in June from 1.53% in May. Food inflation continues to drive overall price increases, with monthly food inflation rising to 3.25% in June from 2.19% in May, particularly affecting staples like meat, tomatoes, and plantain flour.
Geographical disparities add complexity to the inflation narrative, with urban areas (22.72% year-on-year) facing stronger price pressures than rural regions (20.85% year-on-year). State-level variations are stark – Borno recorded inflation at 31.63%, while Zamfara experienced just 9.90%. Food inflation extremes range from 47.40% in Borno to 6.21% in Katsina.
The projected decline to 17% by November would signify considerable progress; however, substantial risks remain. Food supply chains are vulnerable to weather shocks and security challenges, while potential adjustments to fuel subsidies or electricity tariffs could reignite inflationary pressures. Global commodity price movements and exchange rate stability will be crucial in determining whether Nigeria can achieve and maintain this disinflation trajectory.
For policymakers, the challenge lies in maintaining monetary discipline while addressing structural constraints in agriculture, transportation, and energy that perpetuate inflationary pressures. While base effects may enhance headline figures, achieving lasting price stability will require strategies that transcend monetary policy alone. The upcoming months will test whether Nigeria’s economy has genuinely turned a corner or if the expected improvement in November is merely a temporary reprieve amidst a longer inflationary cycle.