Nume Ekeghe

Experts in the financial service sector have projected that Nigeria’s inflation will continue its downward trajectory in the coming months, supported by stronger macro-economic fundamentals, easing food prices, and a more stable energy environment. 

This outlook follows fresh data showing that headline inflation moderated for the seventh consecutive month in October, falling to 16.05 per cent from 18.02 per cent. Food inflation slowed sharply to 13.12 per cent from 16.87 per cent, while core inflation eased to 18.69 per cent from 19.53 per cent—clear signs that underlying price pressures are cooling after a prolonged period of volatility.

The broad-based decline has reinforced market confidence, especially as global rating agencies continue to signal improving sentiment around Nigeria’s macro outlook. In October, Fitch affirmed the country’s ‘B’ rating with a Stable Outlook, while S&P maintained its ‘B–’ rating but revised its outlook to Positive. Analysts note that the difficult reforms introduced across 2023 and 2024—particularly in FX, energy pricing, and monetary policy—are now transitioning into a payoff phase in 2025, producing more stable and predictable macro conditions.

In its latest macroeconomic update, ComercioPartners, which authored the report, underscored that the disinflation trend is now firmer than at any point in the past two years.

The firm emphasised that the improvements reflect both fading cost shocks and increasingly favourable month-on-month inflation dynamics, despite temporary hiccups driven by fuel and gas supply disruptions in October.

Ahead of the November MPC meeting, Comercio Partners expects a 100-basis-point rate cut—supported by a consistent disinflation pattern, stable FX conditions, and improving reserve buffers.

“The MPC is scheduled to hold its 303rd meeting on the 24th and 25th of November 2025. Given the significant improvement in inflation and the relative stability of the exchange rate, we anticipate that the Committee will implement a 100-basis point rate cut, which would mark the second rate cut this year. This projection is supported by the clear disinflation trend and continued exchange rate stability, the firm said”

It further stated: “With stronger macro indicators, recent rating actions reinforce the momentum. In October, Fitch affirmed Nigeria’s ‘B’ rating with a Stable Outlook, while S&P maintained its ‘B-’ rating and shifted the outlook to Positive. The reforms earlier introduced in 2023 and 2024, are now entering their payoff phase in 2025. The initial costs were steep, but much of the adjustment has now been absorbed, and Nigeria’s macro environment shows clearer stability.”

The report also pointed to the naira’s continued recovery as a key driver of disinflation. “The currency appreciated 2.3 per cent in October, closing at N1,421/$, its sixth monthly gain this year supported by stronger FX inflows, improved oil production earlier in the year, and increased foreign portfolio investment. While the impending capital gains tax scheduled for January 2026 may trigger short-term portfolio outflows, Comercio Partners expects only mild exchange-rate pressure given stronger reserves and increasing investor participation.

“October marks the sixth month this year in which the naira appreciated. The currency’s strength reflects higher foreign exchange inflows supported by increased oil output and rising foreign portfolio investment, helped by firmer macro conditions and recent rating actions. However, with the introduction of a capital gains tax scheduled for January 2026, capital flights are likely as investors seek to realise profits before the effective date, although it has been mentioned that there might be a review. We expect only a minimal effect on the exchange rate, as Nigeria remains an attractive investment destination.”

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