Nigeria’s Inflation Forecasted To Drop To 27.1% By December 2025

A recent report projects Nigeria’s inflation rate will decline to 27.1% by December 2025, offering potential relief to businesses and consumers navigating persistent economic challenges. The forecast reflects cautious optimism as structural reforms and policy adjustments reshape the country’s economic outlook.

Headline inflation is expected to remain elevated through the first nine months of 2025 but gradually decrease in the fourth quarter. Factors such as stabilizing fuel prices, improved exchange rates, and increased agricultural production are anticipated to drive this decline.

Economic reforms, including fuel subsidy removal and foreign exchange market liberalization, initially heightened inflationary pressures. However, experts predict these adjustments will smooth out by late 2025, contributing to a more stable financial environment.

The report notes, “Inflation pressures are likely to ease as fuel prices normalize, and exchange rates stabilize, leading to a projected decline to 27.1% by December 2025.”

Monetary policy may also see changes, with expectations that the Central Bank of Nigeria could adopt a more accommodative stance by reducing interest rates to stimulate economic activity.

Nigeria’s business environment shows seasonal recovery in late 2024, driven by festive demand and heightened agricultural activities. The agricultural sector leads the positive trend, achieving a net balance of +13.93 due to increased harvest season activities and rising demand.

While non-manufacturing sectors show resilience, manufacturing, trade, and services continue to face challenges, with high input costs and subdued consumer demand weighing on growth.

Persistent structural issues such as high energy costs, frequent power shortages, and regulatory complexities continue to strain business operations. Many firms report scaling back investments, citing elevated operating expenses and limited credit access as major obstacles.

Despite these challenges, Nigeria’s GDP is projected to grow by 3.5% in 2025, supported by improved conditions in key sectors and stable financial policies. Easing inflation and strengthened consumer spending are expected to further boost economic activity in the coming year.