Why Nigeria’s Inflation May Peak In 2025 But Cool Fast In 2026
By OBIOMA TORI
Inflation Spike Driven by Statistics, Not New Economic Shock
Inflation Set for Temporary Peak
NIGERIA’S inflation rate is projected to climb sharply to 31.92 percent by December 2025 before embarking on a steep decline in 2026, according to a fresh outlook released by United Capital Research. Analysts say the anticipated surge, though alarming at face value, is largely the result of technical and statistical adjustments rather than a deterioration in underlying economic fundamentals.
The projection places Nigeria’s inflation rate near historic highs, raising concerns among households, businesses and investors already strained by prolonged price pressures.
CPI Rebasing Distortion
United Capital Research attributes the projected spike primarily to the rebasing of the Consumer Price Index (CPI) to a 100-point base in December 2024. While the rebasing exercise was designed to improve the accuracy and relevance of inflation measurement, analysts say it will temporarily distort year-on-year comparisons, mechanically inflating reported figures.
According to the firm, this statistical effect is expected to exaggerate inflation readings in late 2025, even if real price pressures are already moderating.
Early Signs of Price Stability
Beneath the headline numbers, recent price data point to emerging stability. A survey of selected food items conducted by United Capital Research shows that prices were largely unchanged in December 2025 compared with November.
Staple items such as local rice, maize and sorghum recorded no month-on-month increases, while garri and beans posted notable price declines of 5.88 percent and 2.8 percent, respectively. Yam prices rose only marginally by 0.8 percent.
Fuel Price Cuts Ease Cost Pressures
Analysts say the moderation in food prices was driven largely by falling transportation costs following sharp reductions in the pump price of premium motor spirit (PMS). PMS prices fell from about ₦900 per litre in late November to roughly ₦785 per litre by the end of December, amid intense price competition between Dangote Refinery and major oil marketers.
This decline helped counter the usual festive-season inflation spike, particularly in food and transport-related sectors.
Outlook: Sharp Relief in 2026
Looking ahead, United Capital Research projects inflation to drop to around 20 percent by January 2026 and trend steadily toward single-digit levels by year-end. The expected disinflation will be supported by easing food and energy prices, improved exchange-rate stability, and the removal of Value Added Tax on selected consumer goods.
The firm notes that such a turnaround could mark the beginning of a more stable macroeconomic environment after years of elevated inflation.
