Nigeria on path to Economic stability as Inflation projected to fall to 17% by December 2025 – IMPI

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The Independent Media and Policy Initiative (IMPI) has projected that Nigeria’s inflation rate could decline further to 17 percent by December 2025, extending the ongoing trend of disinflation.

Fresh figures from the National Bureau of Statistics revealed that inflation dropped to 20.12 percent in August, down from 21.88 percent in July.

In a policy brief released on Wednesday, the think tank urged the Central Bank of Nigeria’s Monetary Policy Committee to cut its benchmark interest rate at the upcoming meeting in light of the easing inflation trend.

IMPI chairman, Dr. Omoniyi Akinsiju, said, “We have observed how some critics have dismissed the decline in the inflation rate as being of no consequence to the people, insisting dismissively that prices have not changed in any way to affect the mass of the Nigerian people. We consider this an expression of the intention not to acknowledge the federal administration’s positive strides. Empirically speaking, the Nigerian economy is now in a disinflationary dispensation. Disinflation is a temporary slowing of the pace of price inflation and is used to describe instances when the inflation rate has reduced marginally over the short term.”

He explained that Nigeria had achieved a rare feat in 2025: “Nigeria recorded a rare disinflation in 2025, with inflation falling from 24.5 per cent in January to 20.12 per cent in August, about a 17.5 per cent drop, the sharpest mid-year slowdown in over a decade. An analysis of 10 years of data shows that, unlike 2020–2024, when inflation accelerated, 2025 stands out alongside 2017 and 2018 as one of the few disinflationary years. Accordingly, Nigeria’s inflation story in 2025 is taking an unusual turn because, for the first time in nearly a decade, the country is witnessing a meaningful and sustained slowdown in consumer prices. In relative terms, that is a 17.5 per cent reduction compared to the January level, a pace of disinflation rarely seen in Nigeria’s modern economic history.”

According to Akinsiju, IMPI’s analysts have identified three main drivers behind the slowdown in inflation. These include the Central Bank’s decision to maintain interest rates at 27.50 percent, which has curbed credit demand and speculative forex activity; stability in the exchange rate, supported by improved inflows from oil, remittances, and non-oil exports; and improved agricultural harvests alongside relative peace in food-producing regions, which have eased pressure on food prices

He added that, “At 20.12 per cent in August, the apparent indication is that the year-on-year inflation rate has fallen below the 21 per cent target set by the CBN. However, with the momentum being generated in the economy, we can also safely aver that inflation may decline to 17 per cent in December 2025, a target near the 15 per cent set by the federal administration. Attaining this target has huge microeconomic implications.”

Looking ahead, IMPI anticipates a policy shift from the apex bank. “We can project that the Central Bank’s Monetary Policy Committee will consider easing the current 27.50 per cent monetary policy rate by at least 50 basis points at its next meeting and by at least 200 basis points by December 2025. Similarly, we also project a review of the cash reserve ratio from 50 per cent for bank deposits to 35 per cent by December 2025. This review will impact the cost of production, enhance business expansion, and create jobs because of the cheaper cost of credit and the quantum of cash available to money deposit banks to perform their financial intermediary roles.”

IMPI also pointed to the recovery of major Nigerian businesses after initial losses linked to the floating of the naira. “The seven companies that had reported a combined loss of N418bn in Q1 2024 returned to a combined pre-tax profit of N289.8bn in Q1 2025. By the end of Q2 2025, all the consumer goods companies had returned to profitability with a combined pre-tax profit of about N264 bn.

This sharp earnings reversal highlights how currency stability and internal cost controls can quickly shift the fortunes of companies previously dragged down by macroeconomic headwinds. This captures the context in which domestic and global commentators have returned a verdict of stability for the Nigerian economy

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