The NESG-Stanbic IBTC Business Confidence Monitor (BCM) report has projected that Nigeria’s inflation rate will decline to 27.1% by December 2025, providing a glimmer of hope for businesses and consumers grappling with persistent economic challenges.
This forecast reflects a cautious optimism about the gradual stabilization of Nigeria’s economy as structural reforms begin to take effect, despite ongoing headwinds.
Inflation has been a persistent challenge for Nigeria’s economy, with rising fuel prices and currency depreciation driving up costs across all sectors.
The report noted that inflationary pressures were particularly pronounced in 2024, following the removal of fuel subsidies and the liberalization of the foreign exchange market. However, it projects a gradual easing of inflationary pressures in 2025.
The report forecasts that headline inflation will remain elevated during the first nine months of the year but will decline significantly in the fourth quarter.
By December 2025, inflation is expected to settle at 27.1%, down from an average of 30.5% year-on-year. This decline will likely be driven by the normalization of petrol prices, improved exchange rate stability, better fiscal management, and increased agricultural output.
The easing of inflation is also expected to influence monetary policy. The Central Bank of Nigeria’s Monetary Policy Committee (MPC) may adopt a more accommodative stance in late 2025, potentially lowering interest rates to stimulate economic activity. This shift would mark a departure from the current tight monetary policy regime aimed at controlling inflation.
The NESG-Stanbic IBTC BCM highlighted that business performance in Nigeria showed slight signs of recovery in December 2024, driven largely by seasonal festive demand. The Current Business Performance Index, which measures the level of economic activity across sectors, rose to +0.77, compared to -2.74 in November.
These figures underscore the uneven nature of the recovery, as certain sectors grappled with structural constraints such as high input costs and subdued consumer demand.
Business confidence, as reflected in the Future Business Expectation Index, remained cautiously optimistic for the coming months. The index settled at +28.61 in December 2024, a slight decline from +33.17 in November, but still indicative of positive sentiment.
Insecurity, limited access to financing, and the complexity of multiple tax regulations further compounded the difficulties faced by businesses. While access to credit improved slightly in December, with a net balance of +8.25, the high cost of borrowing remained a critical barrier to investment and expansion.
While the forecast for inflation and business confidence provides some optimism, the report underscored the persistent structural challenges that continue to hinder economic growth.
The Cost of Doing Business Index surged by +50.32 in December, reflecting mounting pressures on firms.
High energy costs, frequent power outages, and regulatory complexities have significantly impacted business operations.
Many businesses reported that these constraints forced them to scale back investment plans, with a net balance of -31.46 recorded for investment activity in December.
This growth will likely be supported by improved conditions in key sectors such as agriculture, manufacturing, and non-manufacturing industries.
This growth will likely be supported by improved conditions in key sectors such as agriculture, manufacturing, and non-manufacturing industries.
The easing of inflation and the stabilization of foreign exchange rates are expected to bolster consumer spending, providing a further boost to economic activity.