Nigeria may be on the verge of a significant inflation slowdown, as prominent analysts now forecast the consumer price index (CPI) to drop to 18% by November 2025. The projection comes amid ongoing foreign-exchange reforms, improving supply chains, and a measured monetary policy stance from the Central Bank of Nigeria (CBN).
Bismarck Rewane, Chief Executive of Financial Derivatives Company, delivered the forecast during the October session of the Lagos Business School, arguing that increased import activity to prepare for the December demand surge could help drive inflation down further. According to him, the current economic recovery is not superficial but “authentic” supported by real GDP growth of 4.23% in Q2 2025, one of the strongest quarters in recent memory. (The Guardian Nigeria)
Drivers Behind the Forecast
- Improved Foreign-Exchange Liquidity
Rewane credits the greater predictability in FX markets as a result of recent reforms for creating more stable import costs. This helps lower the pass-through of costs from imported goods, easing consumer price pressures. - Seasonal Import Surge
As December approaches, businesses typically import more to match holiday demand. Rewane suggests that this year’s increased import volumes may come when FX liquidity is healthier, leading to downward pressure on prices. - Solid Economic Recovery
The 4.23% growth figure for Q2 2025 is especially significant because of its broad-based nature. That level of economic activity increases both consumer and business confidence, enabling firms to absorb input cost shocks without immediately passing them on to consumers at least for now. - Monetary and Fiscal Discipline
Rewane argues that recent government policies, including tight fiscal management and calibrated monetary reforms, have laid a foundation for disinflation. The CBN has expressed its own commitment to bringing inflation under control, identifying it as the “most disruptive force” to household welfare in Nigeria. (Nairametrics)
Risks That Could Upset the Projection
While the forecast is cautiously optimistic, Rewane also sounded several warnings:
- Oil Price Risk: A sharp decline in global oil prices could erode Nigeria’s FX inflows, making imports costlier and inflationary pressure could return.
- Geopolitical Disruptions: Rewane noted that any escalation in geopolitical tensions for instance, in the Middle East could affect global supply chains, driving up costs.
- Domestic Supply Shocks: Local food markets remain vulnerable to climatic shocks, security challenges, and logistical problems, any of which could reignite food-price inflation.
- Policy Backtracking: Should the government reintroduce costly subsidies or resort to short-term fiscal fixes, the disinflation gains could reverse.
Implications for Key Stakeholders
- Households: A decline to 18% inflation would significantly ease the cost-of-living burden. Consumers may start shifting some spending back toward non-essential items, supporting broader demand.
- Businesses: Manufacturers, traders, and retailers could benefit from more predictable input costs. This could fuel investment, production expansion, and longer-term planning.
- Monetary Authorities: The CBN might gain more confidence to continue a disinflationary cycle, potentially leading to further rate cuts if the trend holds.
- Investors: Lower inflation improves real returns on savings, fixed-income instruments, and could encourage portfolio inflows as confidence in macro stability improves.
What to Watch Next
- NBS CPI reports: Monthly data will be critical to validate whether inflation is indeed cooling toward 18%.
- FX market stability: Sustained orderly FX conditions are essential to maintain low import costs.
- Policy announcements: Any new subsidy program or unexpected fiscal loosening could derail disinflation progress.
- Monetary policy direction: Will the CBN act on improving inflation by lowering rates further or will it remain cautious?
If Rewane’s projection proves correct, Nigeria could be witnessing a genuine turnaround in its inflation trajectory, one that may finally provide relief to beleaguered households and businesses. However, this is not a done deal: sustaining disinflation will require careful policy stewardship, stable FX markets, and resilient domestic supply chains.
