Inflation To Hit 18% In January, Bucking 2025 Downtrend, Say Analysts

Analysts have projected that Nigeria’s headline inflation could rise to about 18 per cent in January, defying the downward trend recorded in 2025.

Analysts who made the projection cited base effects from the recent rebasing of the Consumer Price Index by the National Bureau of Statistics, even as underlying price pressures continue to ease.

The forecast comes ahead of the Consumer Price Index (CPI) data release by the National Bureau of Statistics (NBS), following steady inflationary moderation through 2025. Headline inflation closed December at 15.15 per cent year on year, while the annual average eased sharply to 23.33 per cent from 33.18 per cent in 2024.

The deceleration was driven largely by base effects after the Bureau normalised its CPI computation methodology. Analysts also attribute the moderation to tight monetary conditions sustained by the Central Bank of Nigeria, which maintained a restrictive stance for most of the year.

Data from the Bureau show that food inflation slowed markedly in December to 10.84 per cent year on year from 39.84 per cent a year earlier. On a month-on-month basis, food prices declined by 0.36 per cent, reflecting lower prices of staples such as tomatoes, garri, eggs, vegetables, beans and grains.

Core inflation also moderated, easing to 18.63 per cent year on year from 29.28 per cent in December 2024. Month-on-month growth slowed to 0.58 per cent from 1.28 per cent in November, pointing to softer non-food price pressures.

Although the December Food Price Watch report is yet to be released, November data indicate that prices across 42 food items eased by an average of 0.9 per cent month on month. On a year-on-year basis, the 27 food items tracked recorded average price increases of 1.79 per cent, significantly lower than 7.62 per cent in October, suggesting improving supply conditions supported by harvest gains, lower energy prices and relative exchange rate stability.

Energy-related costs also moderated. Average diesel and petrol prices declined by 3.2 per cent and 11.8 per cent year on year to N1,401.63 per litre and N1,048.63 per litre respectively. The average cost of refilling a 12.5kg cooking gas cylinder fell from N17,274.16 to N13,438.90, reflecting improved availability.

However, transport fares remain elevated. The Bureau’s Transport Fare Watch showed double digit increases across categories.

The average one way domestic air fare rose by 82.7 per cent month on month and 92.7 per cent year on year, while bus fares within cities increased by 12.3 per cent month on month and 38.1 per cent year on year, largely due to festive demand and pricing pressures.

According to analysts at Cowry Research, the recent CPI normalisation has created a lower base for January comparisons, making a temporary uptick in headline inflation likely in January and possibly February. It projects inflation to trend within the 17.8 per cent to 18.7 per cent range in 2026, driven by election related spending pressures and fading base effects, even as structural reforms support a medium term dis-inflation path.

Similarly, analysts at Quest Merchant Bank said the lower base effect could push January inflation to around 18 per cent to 19 per cent. They, however, expect inflation to resume a broadly dis-inflationary trajectory over the course of the year, supported by softer energy prices, stable exchange rate conditions and easing food costs.