Due to the planned rebasing of the Consumer Price Index (CPI) and improvements in key economic factors, economic analysts expect Nigeria’s inflation rate to decline to between 27% and 30% by the end of 2025. This forecast is much higher than the 15.75% inflation rate projected in the 2025 budget.
According to Moyosore Onanuga, Head of Investments at AIICO, Nigeria’s inflation rate was 34.8% in December 2024, up from 29.9% in January 2024. In early 2025, inflation is likely to remain high due to the current high costs of goods and services but show signs of slowing down.
Analysts estimate that inflation could average around 30.5% in the first half of the year and decline to approximately 27.1% by December 2025. This projected decrease is attributed to a stable exchange rate, increased agricultural production, and a reduction in petrol price fluctuations. If the CPI rebasing takes effect, inflation could drop significantly, potentially reaching the low 20s or even the teens.
Investment advisor Onyinyechi Onwubu believes the rebased CPI will show inflation at about 23%. Meanwhile, Olusegun Atere, Head of Corporate Finance at Apel, expects inflationary pressures to persist through mid-2025 before slowing in the third quarter. He attributes this to ongoing monetary tightening, a relatively stable naira, and improved food supply supported by government-backed security for farmers.
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The CPI rebasing from 2010 prices to 2024 prices, will provide a more recent and realistic benchmark that will significantly reduce inflation, as price changes will be measured against more recent data.
Other key factors contributing to lower inflation include the seasonal drop in food prices after the holidays, strict monetary policies by the Central Bank of Nigeria (CBN), a more stable naira due to foreign exchange reforms, and increased local fuel refining, which reduces dependence on expensive imports.
