Analysts have projected a sustained deceleration in Nigeria’s inflation in the near term on the back of the ongoing harvest season, exchange rate stability, softer energy prices, and the base effect.
The projections followed the release of the July 2025 Consumer Price Index, which saw the decline in inflation extended to the fourth month.
According to the National Bureau of Statistics, the headline inflation rate slid to 21.88 from 22.22 per cent in June. On a month-on-month basis, the headline inflation rate in July 2025 was 1.99 per cent, which was 0.31 per cent higher than the rate recorded in June 2025 (1.68 per cent).
The food inflation rate in July 2025 was 22.74 per cent on a year-on-year basis. On a month-on-month basis, the food inflation rate in July 2025 was 3.12 per cent, down by 0.14 per cent compared to June 2025 (3.25 per cent). Core inflation, which excludes volatile agricultural items and energy, slowed to 21.33 per cent in July from 27.47 per cent a year earlier. Month-on-month, it fell to 0.97 per cent from 2.46 per cent in June, reflecting easing price pressures in non-food categories.
While the experts projected a positive picture for Nigeria’s inflation figure, they also expressed concerns regarding persistent food supply constraints, new policy-driven costs like the four per cent Free On-Board charge introduced in August, and proposed increases in customs licensing fees. These forces suggest that while disinflation is expected, the pace may be limited, and inflationary pressures could remain elevated due to underlying structural issues and new policy introductions.
In their weekly report, the analysts at Afrinvest said, “We expect inflation to maintain a gradual easing trajectory in the near term, supported by continued FX stability, early harvest inflows, and relatively subdued global commodity prices. Nevertheless, persistent food supply constraints and seasonal factors could limit the pace of disinflation, keeping monthly inflation elevated in the months ahead. Hence, our forecast for August places headline inflation at 21.3 per cent year-on-year.”
The Meristem analysts echoed similar sentiments and said that the Monetary Policy Committee of the Central Bank of Nigeria may maintain its cautious stance.
“Given persistent month-on-month pressures, we anticipate the MPC will retain a cautious monetary policy stance at its next meeting to keep inflation expectations anchored.”
In its macroeconomic update, Comercio Partners expressed concerns that the introduction of the four per cent Free On-Board charge in August, which replaces the one per cent Comprehensive Import Supervision Scheme and seven per cent port surcharge, may lead to increased inflationary pressures affecting both core and food inflation.
“The new charge increases the landing cost of goods at the ports, and this higher cost could eventually pass down to consumers through higher prices. On the flip side, the increase discourages imports, which can help support naira stability. Looking ahead, the ongoing proposed hike in licensing fees for customs agents and freight forwarders, though not yet implemented, is expected to further increase costs in the supply chain as agents pass these costs on to their principals. These higher operational costs would inevitably add another layer of upward inflation pressure, especially to core inflation,” the macroeconomic update indicated.
Comercio Partners added, “The July inflation data points to easing price pressures, with headline and core inflation falling year-on-year and month-on-month core and food inflation also declining. Stable exchange rates and the onset of the harvest season are expected to support further disinflation, as increased food supply and seasonal price moderation feed into headline inflation. However, persistent year-on-year food inflation reflects ongoing supply and security challenges, particularly in food-producing states. Sustained disinflation will require careful sequencing of reforms, targeted interventions in food supply chains, and security improvements in agricultural regions to ensure that short-term gains translate into lasting stability.”
Also, the analysts at CardinalStone noted that “In August, inflation is expected to remain on its disinflationary path, aided by sustained declines in energy prices as the Dangote refinery maintains its distribution strategy, which removes transportation costs for fuel marketers and large-scale consumers. This support could offset upward pressures from food inflation risks and seasonal FX demand during the summer months, a trend typically seen in the third quarter.”
