The National Bureau of Statistics (NBS) revised the 2025 inflation series to normalise the anticipated technical spike in December associated with the earlier CPI rebasing exercise. The NBS adopted the 12-month average for 2024 as the index reference period, rather than December 2024, as used in the initial rebase, to better capture the underlying price trend over the period. Following the adjustment, Nigeria’s headline inflation moderated by 218bps to 15.15% y/y in December 2025, down from a revised 17.33% y/y in November.
The deceleration was driven by a slowdown in both food inflation (10.84% y/y vs November: 14.21% y/y) and core inflation (18.63% y/y vs November: 20.59% y/y). On a month-on-month basis, inflation eased to 0.54% in December from 1.22% in November. For the full year, average inflation settled at 23.33% y/y in 2025FY, higher than the pre-adjustment estimate of 21.90% y/y.
On a month-on-month basis, the food index declined by 0.36% (November: +1.13% m/m), resulting in a y/y print of 10.84% in December (November: 14.21% y/y). The decline primarily reflects a drop in farm produce prices (-0.41% m/m vs. November: +0.77% m/m), which may have been driven by the extension of the main harvest period. Conversely, imported food inflation (+2.77% m/m vs November: +0.60% m/m) increased, partly driven by higher consumer demand during festive celebrations. Overall, food inflation averaged 22.46% y/y in 2025FY.
At the same time, core inflation dropped by 70bps to 0.58% m/m, from 1.28% m/m in November, bringing the y/y rate to 18.63% (November: 20.59% y/y). This was driven by slower price increases across the transport (-282bps to 0.12% m/m), health (-270bps to 0.01% m/m), miscellaneous goods & services (-174bps to 0.41% m/m), restaurants and accommodation services (-174bps to 0.41% m/m), alcoholic beverages, tobacco (-99bps to 0.09% m/m), and utilities (-53bps to 0.01% m/m) sub-items. On the other hand, price rose mainly across the education services (+53bps to 0.55% m/m) and recreation, sport and culture (+56bps to 2.14% m/m) sub-components. Broadly, core inflation averaged 23.66% in 2025FY.
Inflationary Pressures in January will Likely Remain Tepid
Inflation drivers remain broadly supportive of easing price pressures in January 2026. The naira has averaged NGN1,425.00/USD so far this month (December: NGN1,447.81/USD), signalling sustained exchange rate stability and a lower pass-through of imported inflation. In parallel, prices of refined petroleum, particularly PMS and Diesel, have continued to decline, providing near-term relief to transport and energy-related costs, although the recent uptick in crude oil prices poses an upside risk if sustained.
On a seasonal basis, farm output is likely to have softened as the main harvest season (typically spanning mid-September to December) comes to an end. However, weaker post-festive demand may partially offset the resulting supply pressures, thereby limiting upward pressure on food inflation.
Overall, we expect headline inflation to moderate to 0.37% m/m in January (December: +0.54% m/m). That said, the adjusted CPI series from the NBS suggests a potential uptick in the year-on-year print, largely reflecting unfavourable base effect, given the sharp 2.83% m/m deflation recorded in January 2025. Thus, we estimate inflation to increase to 18.95% y/y in January, before falling sharply in subsequent months.
2026 Inflation Forecast Revised Downwards
In light of the revised CPI series, we have lowered our 2026 inflation forecast, as the expected January spike is less pronounced than under the previous data set. Under our baseline scenario, headline inflation is now projected to average 14.0% y/y in 2026E, down from 16.30% previously, with core assumptions unchanged.
Consistent with our 2026 full-year outlook, disinflation is expected to be reinforced by sustained naira stability, lower energy prices, and steady agricultural output. We project the naira to trade within the NGN1,350.00–1,450.00/USD range, helping to contain imported inflation. In addition, average PMS prices are forecast to decline to NGN817.50/litre, reflecting lower crude oil prices (2026E: USD58.00/bbl vs. 2025FY: USD68.19/bbl) and currency appreciation, thereby easing transport and operating costs and supporting further moderation in core inflation.
Meanwhile, favourable weather conditions, gradual improvements in mechanisation, and lower input costs should underpin agricultural output and keep food prices broadly contained, despite lingering security challenges.
Cordros
