Nigeria's headline inflation rate is projected to decline to 27.1% by December 2025, after averaging 30.5% year-on-year throughout the year, according to the Economic Summit Group Business Confidence Monitor report. Nigeria (NESG)-Stanbic IBTC.
The report predicts that headline inflation will remain high through September 2025, but will fall below 30.0% in the final quarter as the effects of high oil prices ease in year-on-year inflation estimates, unless significant alterations in fuel prices occur.
“We expect headline inflation to remain stable at 9M:25, but settle below 30.0 percent from September 2025, as the high cost of gasoline is removed from year-on-year headline inflation, except unexpected negative shocks to gasoline prices,” the report says. fixed.
The report further attributes the expected decline to greater stability in fiscal policies, food supply and the exchange rate.
It forecasts that easing inflationary pressures could lead the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) to adopt a more accommodative monetary policy stance by the end of 2025.
“In our view, this could prompt the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) to shift to an accommodative monetary policy stance by the end of 2025. Relatively lower headline inflation in the second half of 2024 should support consumer spending. and business activity should also improve as the impact of the government's two flagship policies (foreign exchange liberalization and elimination of fuel subsidies) diminishes,” the report states.
The Nigerian economy is also projected to grow 3.5% year-on-year in 2025, up from an estimated 3.2% in 2024, driven by improved macroeconomic conditions and moderate inflation rates.
Additionally, the report highlighted signs of recovery in business activity in December 2024, driven by festive demand. The current business performance index rose to +0.77, marking the first positive reading since September 2024 and a significant improvement from the -2.74 recorded in November.
Agriculture emerged as the best performing sector with a net balance of +13.93, driven by increasing harvests and demand for agricultural products. Non-manufacturing industries also showed resilience, recording a net balance of +5.80. However, the manufacturing, trade and service sectors faced notable challenges.
Despite a slight decline in the Future Business Expectations Index, from +33.17 in November 2024 to +28.61 in December, the report indicated cautious optimism about improving economic conditions in early 2025, particularly in the agricultural, manufacturing and non-manufacturing sectors.
Inflation remains a key concern for Nigeria's economy, as rising fuel costs and currency devaluation drive up costs in several sectors.