Inflation Seen Dropping to 17% In November Amid Stable Macros
Nigeria’s headline inflation is projected to fall to between 17.0% and 17.9% year-on-year (y/y) by November 2025, driven by favourable base effects and relative macroeconomic stability, according to analysts at a Stanbic IBTC-hosted conference call.
The projection reflects optimism that inflation will remain below 20.0% by October, despite anticipated short-term monthly pressures.
In the near term, inflation on a month-on-month (m/m) basis may climb further in July and August, which are typically marked by peak flooding in southern Nigeria and the lean agricultural season in the north. These seasonal factors historically drive food scarcity and higher food prices, contributing to short-term price pressures.
Nonetheless, analysts expect the base effects from last year’s elevated inflation figures during the same period to moderate the annual inflation readings. Forecasts put July’s y/y inflation at between 21.71% and 21.88%, and August at 21.28% to 21.63%.
Despite these fluctuations, core inflation is likely to remain stable in the near term, estimated at 1.1% to 1.3% m/m, thanks to relatively benign energy costs and a stable naira exchange rate. However, December may witness a notable spike in headline inflation due to a sharp base effect created by the Consumer Price Index (CPI) rebasing.
The rebased CPI had shown inflation at 15.44% y/y in December 2024, compared to a pre-rebase figure of 34.80% y/y. This sharp drop in the base figure sets the stage for a high comparative rate in December 2025, estimated at around 34.0% y/y, assuming a conservative m/m reading of -0.4%.
For inflation to end the year at 17.0% y/y, monthly inflation would need to fall by an unlikely 12.8%. If, however, the National Bureau of Statistics (NBS) reverts to the pre-rebased 34.8% for December 2024, then end-2025 inflation could land closer to 22.0% to 23.0% y/y.
On the monetary policy front, the Central Bank of Nigeria’s Monetary Policy Committee (MPC) is expected to hold interest rates steady at its July 21–22 meeting, reflecting caution amid a still-volatile inflation outlook and global uncertainty.
At its May meeting, the MPC had maintained all policy parameters, reiterating its focus on anchoring inflation expectations and managing exchange rate pressures. While some committee members may favour a rate cut in July, food price risks and broader economic instability could delay such a move.
The earliest shift to a more accommodative monetary stance is expected at the September meeting, when clearer inflation moderation may support easing.
In the interim, the MPC may consider narrowing the asymmetric corridor from the current +500 basis points/-100 basis points around the Monetary Policy Rate (MPR) to signal a dovish tilt. Analysts anticipate a cumulative rate cut of between 150 and 200 basis points over the course of 2025, following an aggressive 875 basis point hike in 2024.
