Nigeria’s headline inflation rate is expected to average 30.5% year-on-year in 2025, with a projected decline to 27.1% by December 2025.
According to the latest NESG-Stanbic IBTC Business Confidence Monitor report, this forecast assumes that headline inflation will stay elevated in September 2025 but drop below 30.0% after that, as the impact of high petrol costs fades from the year-on-year inflation figures, assuming there are no unexpected negative shocks to petrol prices.
Inflation continues to be a major concern for Nigeria’s economy, driven by rising fuel costs and currency depreciation, which are pushing up expenses across various sectors.
The report stated, “We expect headline inflation to remain sticky in 9M:25 but settle below 30.0 per cent from September 2025 as high petrol cost gets smoothened out of the year-on-year headline inflation, barring any unexpected negative shocks to petrol prices.
“This expectation, in addition to our prognosis on the USD/NGN pair, fiscal deficits, and food supplies, informs our forecast that the headline inflation may average 30.5 per cent y/y in 2025 and settle at 27.1 per cent by December 2025.”
“In our view, this could induce the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) to switch to an accommodative monetary policy stance in late 2025. A relatively lower headline inflation in H2:24 should support consumer spending, and business activity should also improve as the impact of the government’s two-flagship policies (FX liberalization and fuel subsidy removal) subside.
“Overall, we estimate the Nigerian economy to grow by 3.5% y/y in 2025 from an estimated 3.2% y/y in 2024.
“The anticipated easing of inflation is also expected to influence monetary policy. According to the report, the Central Bank of Nigeria’s Monetary Policy Committee may adopt a more accommodative stance in late 2025, potentially reducing interest rates to stimulate economic activity.”
The report further noted a slight recovery in business performance in December 2024, driven by seasonal festive demand.
The Current Business Performance Index, which tracks economic activity across sectors, increased to +0.77, up from -2.74 in November. This marked the first positive reading since September 2024, indicating a modest improvement in business activity.
However, sectoral performance was uneven. Agriculture led as the top-performing sector with a net balance of +13.93, boosted by increased harvest activities and higher demand for produce.
Non-manufacturing industries also showed strength, posting a net balance of +5.80. In contrast, the manufacturing, trade, and services sectors faced significant difficulties.
The Future Business Expectation Index, reflecting business optimism for future conditions, stood at +28.61 in December 2024, slightly down from +33.17 in November.
Despite the decline, the index suggests cautious optimism among businesses for better conditions in the first quarter of 2025, especially in agriculture, manufacturing, and non-manufacturing sectors.