According to insights shared during a Stanbic IBTC-hosted conference call, Nigeria’s headline inflation is forecast to increase to between 17.0% and 17.9% by November 2025, aided by stabilising macroeconomic indicators and base effects.
Despite the projection for a calmer inflationary environment by the end of the year, analysts expect temporary spikes in month-on-month inflation during July and August, traditionally known for seasonal agricultural disruptions due to flooding in the south and lean harvests in the north, according to Businessday.
Analysts anticipate that high inflation figures from the same period in 2024 will help moderate annual rates. Forecasts put July’s year-on-year rate between 21.71% and 21.88%, and August between 21.28% and 21.63%.
Core inflation, however, is expected to remain relatively steady over the next few months, projected at 1.1% to 1.3% m/m, thanks to tame energy prices and a stable currency.
A sharp surge in year-end inflation may occur in December due to the base effect introduced by the Consumer Price Index (CPI) rebasing. The rebased CPI recorded 15.44% y/y inflation in December 2024, down sharply from the pre-rebased rate of 34.80%.
This statistical change sets the stage for a high comparative reading in December 2025, possibly around 34.0% y/y if m/m inflation prints at -0.4%. However, if the NBS returns to using the pre-rebased 34.8% as the comparative base, the year-end inflation could settle between 22.0% and 23.0%.
Monetary policy is expected to remain tight in the short term, with the Central Bank of Nigeria’s Monetary Policy Committee likely to maintain the current interest rate settings at its July 21–22 meeting.
Although discussions of rate cuts are ongoing, analysts believe that easing may not begin until September, when clearer signs of disinflation are visible. A total reduction of 150 to 200 basis points is projected across 2025, following aggressive hikes totalling 875 basis points this year.
The MPC may also adjust the asymmetric corridor around the Monetary Policy Rate (MPR), which currently stands at +500/-100 basis points, as a signal of a potential policy shift.
