Inflation in Nigeria is expected to experience a significant decline in 2025, driven by a combination of factors, such as for a higher base effect, the stabilisation of exchange rates, and the normalisation of energy prices following the subsidy removal, according to Comercio Partners, Nigeria’s investment company.
As of December 2024, Nigeria’s inflation rate rose to 34.80 percent, slightly up from 34.60 percent in November 2024, as reported by the National Bureau of Statistics (NBS).
In the parallel market, the naira appreciated to N1,565 on Friday, gaining N5 against the dollar, which had traded at N1,570 the previous day.
Meanwhile, in the Nigerian Foreign Exchange Market (NFEM), the naira remained stable, closing at N1,502.50 per dollar on Friday, almost unchanged from the previous day’s N1,502/$1, according to data from the Central Bank of Nigeria (CBN).
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Stephen Osho, CEO of Comercio Partners Capital, mentioned that he expects the naira to appreciate further in the future. He attributed this optimism to several factors, including the clarity provided by the CBN regarding the clearance of foreign exchange (FX) backlogs. “This has been one of the challenges we’ve faced in terms of supply shortages,” he explained. Osho noted that in recent times, there has been an increase in FX inflows, improving liquidity in the market. He also pointed to the CBN’s focus on transparency, liquidity, and price discovery, all of which have contributed to this improvement.
Comercio Partners, in its 2025 macroeconomic outlook, highlighted that the rebasing of Nigeria’s Consumer Price Index (CPI) to 2024 would also create statistical effects that could lower inflation figures.
According to Ifeanyi Ubah, head of investment research and global macro strategist, “We expect headline inflation to decrease to around 15 percent in the first half of 2025, indicating a gradual return to economic stability.”
The report also emphasised the importance of local refining capacity expansion, particularly with the launch of the Dangote Refinery. This development is expected to reduce the impact of exchange rate fluctuations on energy prices. By relying more on domestically refined petroleum, Nigeria is likely to see a reduction in energy price volatility. This, combined with a more stable exchange rate, is expected to lower production and transportation costs, creating a positive ripple effect throughout the broader economy.
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The NBS has announced plans to update the base year for calculating the Consumer Price Index (CPI) from 2009 to 2024. Initially, this adjustment is expected to lower the headline inflation figures, the report said. However, a deeper analysis suggests a more complex picture. Although the rebasing will likely reduce CPI in 2025, it will also lower 2024 figures.
The company said the direction and magnitude of the Year-on-Year (YoY) inflation will depend on the price changes in each commodity basket over the two periods. Given that 2024 saw one of Nigeria’s highest inflation rates, the updated base year is expected to make subsequent CPI figures appear relatively lower. With no immediate triggers for a sharp inflation spike in 2025, this statistical adjustment aligns with the broader expectations of a decline in inflation trends. Moreover, the reduced weightings for key inflation drivers, especially food and energy, reinforce the likelihood of a significant drop in inflation, supporting the forecast for a substantial decrease by mid-2025.
Despite the challenges faced in 2024, Nigeria’s economy showed remarkable resilience. This momentum is expected to continue into 2025, supported by several key drivers, the report said.
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