Nigeria’s headline inflation rate is projected to average 30.5% year-on-year in 2025 and settle at 27.1% by December 2025.
According to the latest NESG-Stanbic IBTC Business Confidence Monitor report, the forecast is based on the premise that headline inflation is expected to remain sticky in September 2025 but settle below 30.0% 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.
Inflation remains a central concern for Nigeria’s economy, with rising fuel costs and currency depreciation driving up expenses across all 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 highlighted that business performance in December 2024 experienced a slight recovery due to seasonal festive demand.
The Current Business Performance Index, which measures economic activity across sectors, rose to +0.77, an improvement from -2.74 recorded in November.
This marked the first positive reading since September 2024, reflecting a modest uplift in business activity.
However, the performance across sectors was uneven. Agriculture emerged as the top-performing sector with a net balance of +13.93, spurred by heightened harvest activities and increased demand for produce.
Non-manufacturing industries also showed resilience, recording a net balance of +5.80. In contrast, the manufacturing, trade, and services sectors faced significant challenges.
The Future Business Expectation Index, which reflects optimism about future business conditions, settled at +28.61 in December 2024, down slightly from +33.17 in November.
Despite the decline, the index still indicates cautious optimism among businesses for improved conditions in the first quarter of 2025, particularly in agriculture, manufacturing, and non-manufacturing sectors.
