Nigeria’s annual inflation rate slowed significantly to 15.5% in December 2025, down from 17.3% in November, as the National Bureau of Statistics (NBS) updated its method for calculating consumer prices. The revision replaced the previous single-month reference point with a 12-month average index for 2024, smoothing out seasonal distortions and preventing an artificial spike in inflation figures.
The NBS explained that using the full year’s average for 2024 as a baseline “avoids an artificial spike” that would have otherwise exaggerated December’s inflation rate. This methodological change offers a more accurate picture of Nigeria’s true inflation dynamics.
This adjustment brings Nigeria’s inflation figures in line with similar trends seen in other key African economies. Ghana’s inflation eased to 5.7% last month, marking the twelfth consecutive month of decline, while Ethiopia recorded its first single-digit inflation rate in 18 years at 9.7%, driven largely by moderating food prices amid ongoing economic reforms.
Despite the methodological change, Nigeria’s inflation had been steadily easing throughout 2025, dropping from a high of 27.6% in January. Month-on-month inflation also cooled to 0.54% in December from 1.2% in November, showing genuine price moderation as the year ended. Food inflation, which makes up about 43% of household expenses, fell sharply to 10.84% year-on-year from 39.84% a year earlier. Prices for staples like tomatoes, garri, eggs, millet, plantains, potatoes, and onions declined during the month.
Core inflation, excluding food and energy, eased to 18.63% from 29.28%, with monthly core inflation slowing to 0.58% from 1.28%. This broad-based easing suggests that price growth is slowing across most sectors, reinforcing confidence in Nigeria’s disinflation trend.
The re-referencing of inflation data was critical. Before the update, some economists predicted that December inflation might spike as high as 30% due to base effects. Without this adjustment, businesses might have raised prices in anticipation, and investors could have misread the data, potentially leading to tighter monetary policy and market volatility.
By smoothing out inflation data, the NBS has provided a clearer view of underlying price trends, helping businesses better plan pricing, production, and inventory decisions, and giving markets a more reliable indicator of inflation momentum.
Looking ahead, the revised inflation data may give the Central Bank of Nigeria (CBN) more flexibility to ease interest rates at its February policy meeting. In 2025, the CBN maintained a cautious stance, keeping rates mostly steady except for a modest cut in September despite the disinflationary trend.
The CBN’s 2026 Macroeconomic Outlook projects inflation will continue to decline to around 12.94%, supported by lower food and fuel prices and a more stable naira currency. The effects of prior monetary tightening and easing supply pressures are expected to sustain the downward momentum in inflation.
With the CPI recalibration, policymakers, investors, and businesses now have a more accurate and stable basis for economic planning, reducing uncertainty and supporting confidence in Nigeria’s economic outlook.
Reporting by Noko David.
