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The Independent Media and Policy Initiative (IMPI) has predicted that Nigeria’s inflation rate will decline to 17 per cent by December 2025, citing continued signs of disinflation in the economy.
This comes after the National Bureau of Statistics reported that inflation slowed to 20.12 per cent in August from 21.88 per cent in July, showing a rare downward trend in consumer prices.
In a policy statement released on Wednesday, IMPI advised the Central Bank of Nigeria (CBN) to consider reducing its benchmark interest rate at its next Monetary Policy Committee (MPC) meeting, in line with the positive developments.
The Chairman of IMPI, Dr. Omoniyi Akinsiju, said the decline was evidence of progress under the current administration, despite claims by critics that the slowdown in inflation had not translated into relief for ordinary Nigerians.
“We consider it important to point out that the Nigerian economy is now in a disinflationary dispensation. Disinflation is a temporary slowing of the pace of inflation and is used to describe instances when the inflation rate reduces marginally over the short term,” Akinsiju explained.
He added that Nigeria recorded a rare slowdown in 2025, with inflation falling from 24.5 per cent in January to 20.12 per cent in August, marking about a 17.5 per cent drop—the sharpest mid-year decline in more than 10 years.
“Unlike the years between 2020 and 2024, when inflation consistently accelerated, 2025 has stood out, alongside 2017 and 2018, as one of the very few disinflationary years. For the first time in nearly a decade, Nigeria is witnessing a meaningful and sustained reduction in consumer prices,” he noted.
The policy think tank attributed the inflation slowdown to three key factors: tight monetary policy, stable foreign exchange inflows, and improved food production.
According to IMPI, the CBN’s decision to hold interest rates at 27.50 per cent has curbed speculative activities in the foreign exchange market and slowed excessive credit demand. In addition, higher foreign exchange inflows from oil, remittances, and non-oil exports have helped stabilize the naira. A better harvest, supported by relative calm in food-producing areas, has also eased pressure on food prices.
“With inflation at 20.12 per cent in August, it has already fallen below the 21 per cent target set by the CBN for the year. With the momentum currently driving the economy, inflation could fall to 17 per cent by December 2025, close to the 15 per cent target set by the federal administration,” Akinsiju said.
IMPI projected that the MPC may cut the Monetary Policy Rate (MPR) by at least 50 basis points at its next meeting and by 200 basis points before the end of the year. It also predicted a possible reduction of the Cash Reserve Ratio (CRR) for commercial banks from 50 per cent to 35 per cent, which could make loans cheaper, ease production costs, and boost job creation.
The think tank further highlighted how some of Nigeria’s largest firms had begun to recover after the naira float disrupted their operations in 2024.
It recalled that seven major companies reported a combined loss of N418 billion in the first quarter of 2024. However, by the first quarter of 2025, the same firms returned to profitability, posting a combined pre-tax profit of N289.8 billion. By the end of the second quarter of 2025, consumer goods companies alone had reported a pre-tax profit of about N264 billion.
According to IMPI, the turnaround shows how exchange rate stability and cost discipline can quickly revive businesses that had been dragged down by previous economic volatility.
“This sharp earnings reversal highlights how stability in the foreign exchange market has restored confidence. It also reflects why domestic and global commentators are now describing the Nigerian economy as more stable,” the group said.
While the forecast is positive, analysts caution that sustaining the disinflationary trend will require continuous efforts to maintain exchange rate stability, boost agricultural output, and balance monetary policy with growth objectives.
For many Nigerians, the real test will be whether falling inflation translates into lower food prices and living costs, which remain a major challenge for households.
