Economic analysts and industry experts anticipate that Nigeria’s inflation rate will moderate between 27% and 30% by the end of 2025, mainly due to the planned rebasing of the Consumer Price Index (CPI) and other macroeconomic factors.
However, this projection remains significantly higher than the 15.75% inflation rate assumption in the 2025 budget.
Despite expectations of a gradual decline, some experts expect that inflationary pressures will persist in the first half of 2025, given the already high cost of goods and services.
CPI rebasing: The CPI will be rebased from 2010 prices to 2024 prices, providing a more recent and realistic benchmark. This is expected to significantly reduce inflation, as price changes will be measured against more recent data.
Decline in food prices: Prices of essential food items typically drop in January after the festive period. A market survey by Naijaonpoint indicates a price decline in some food items such as pepper, onions, beans, and groundnut oil, among others.
Monetary tightening by CBN: The CBN’s hawkish stance on interest rates will continue in 2025 to curb inflation. The policy has been effective since the assumption of office by the new CBN governor.
Naira stabilization: The naira is expected to be more stable in 2025 compared to 2024, this is following that the CBN has addressed FX backlog issues, introduced a new FX Code, foreign reserves increased in 2024 and so on, all these could support currency stability.
Normalization of petrol prices: Nigeria’s reliance on imported petroleum products is expected to decline. Petroleum imports accounted for 39% of total imports over the past three years and 40% as of Q3 2024. Increased local refining capacity is set to reduce forex demand and contribute to overall economic stability.