Economic analysts and industry experts forecast that Nigeria’s inflation rate will moderate to between 27 per cent and 30 per cent by the end of 2025, driven largely by the planned rebasing of the Consumer Price Index (CPI) and improved macroeconomic conditions......CONTINUE READING THE ARTICLE FROM THE SOURCE>>>>>
However, this projection remains significantly above the 15.75 per cent inflation assumption in the 2025 budget, raising concerns over the country’s economic outlook.
As of December 2024, Nigeria’s inflation rate stood at 34.80 per cent, reflecting sustained inflationary pressures.
A year prior, in January 2024, inflation was at 29.90 per cent, marking an 8.08 per cent increase year-on-year. Despite expectations of moderation, many experts believe inflationary pressures will persist in the first half of 2025 before a gradual decline in the latter part of the year.
According to Moyosore Onanuga, Head of Investments at AIICO, inflation in January 2025 is expected to remain high but show signs of easing compared to 2024 levels.
“Using the current CPI, analysts project inflation to hover around 30.5 per cent year-on-year, with a potential decline throughout the year, reaching approximately 27.1 per cent by December 2025.
This anticipated decline is attributed to a combination of base effects, improved exchange rate stability, increased agricultural output, and normalization of petrol prices.”
However, she notes that CPI rebasing—if implemented in January—could result in a significantly lower inflation rate, potentially bringing it down to the low 20s or even the teens.
Similarly, Onyinyechi Onwubu, Investment Advisor at FCSL Asset Management, emphasized the role of the rebasing exercise in shaping inflation outcomes for 2025.
“We expect the planned rebasing to be completed before the January 2025 CPI release. If that is the case, inflation could drop to around 23 per cent levels in the first quarter, as price changes will be measured against more recent data rather than the outdated 2010 base year.”
Despite the optimistic outlook, some analysts warn that inflationary pressures will remain elevated in the first half of 2025 due to structural inefficiencies in the economy.
Olusegun Atere, Head of Corporate Finance at Apel, predicts that a gradual deceleration in price pressures will only begin in the third quarter of 2025, driven by base effects, monetary tightening, and improved currency stability.
“By the end of the year, we anticipate inflation will moderate to an average of 30 per cent, helped by a relatively more stable naira compared to 2024, ongoing monetary tightening, and increased food production, particularly as military support aids farmers in food-producing regions.”