Nigeria’s headline inflation rate is projected to rise sharply in December 2025, with investment firm AIICO Capital Limited forecasting an increase of at least 1,700 basis points to a range of 31.4% to 32.4% year-on-year.
The projection signals a potential end to Nigeria’s eight-month disinflation trend, ahead of the release of official inflation data by the National Bureau of Statistics (NBS) later this week.
Market expectations are centred on the NBS publishing the Consumer Price Index (CPI) for December 2025 on January 15. Consensus estimates point to a pronounced upward shift in inflation, reflecting price developments across the economy following the rebasing of inflation data to December 2024 prices.
According to AIICO Capital, the headline inflation rate — which tracks average price changes across both food and non-food items — is expected to accelerate significantly from 14.45% recorded in November, driven primarily by base-year effects and elevated end-of-year consumption.
The firm noted that the sharp rise would largely stem from base effects across both core inflation, which excludes farm produce, and food inflation, compounded by increased spending during the festive period.
AIICO Capital stated that its assessment is anchored on the interaction between base-year effects and seasonal consumption pressures, which collectively pushed prices higher in December.
The firm’s analysis indicates that core inflation is expected to moderate slightly on a month-on-month basis, easing by at least 10 basis points to between 1.0% and 1.2%. However, on a year-on-year basis, core inflation is projected to rise sharply by at least 1,510 basis points, reaching a range of 32.50% to 32.60%.
The marginal monthly easing in core inflation is attributed to two key developments: a modest appreciation of the naira at the official foreign exchange window and a notable decline in petrol prices during December.
Data shows that the naira strengthened by ₦10.98 to close at ₦1,435.76 per dollar at the official market, although it weakened slightly by ₦5.00 to ₦1,475.00 per dollar in the parallel market.
Fuel prices also provided some relief. Average petrol prices fell by 14.7%, declining from ₦890 per litre to ₦759.50 per litre. This followed a 16% reduction in gantry prices to ₦699 per litre by Dangote Refinery, Nigeria’s largest domestic refiner.
Despite the temporary easing in core inflation pressures, food prices are expected to accelerate further. AIICO Capital projects that the food inflation index will rise by 5 basis points month-on-month to a range of 1.2% to 1.5% in December. On a year-on-year basis, food inflation is expected to surge by approximately 1,800 basis points to between 29.1% and 29.9%, compared to 11.08% recorded in November.
The firm attributed the increase in food inflation to heightened festive demand, coupled with seasonal constraints on food supply as the dry season impacts agricultural output and logistics.
Analysts noted that the combined effects of festive consumption patterns and base-year adjustments are expected to push overall inflation to between 1.1% and 1.3% month-on-month, translating to a headline inflation range of 31.4% to 32.4% year-on-year.
AIICO Capital reiterated that the December inflation outcome would reflect a convergence of seasonal demand pressures and statistical base effects, marking a significant shift in Nigeria’s inflation trajectory as the country enters 2026.
