Nigeria’s June Inflation Seen Easing Slightly, but Food Prices and Festive Spending Pose Risks

Financial experts anticipate a modest decline in Nigeria’s headline inflation for June 2025, following a rate of 22.97% in May. Most projections place the figure between 22.0% and 22.8%, driven largely by the base effect from high inflation in June 2024, the relative stability of the naira, and seasonal supply adjustments. While these trends offer temporary relief, analysts warn that persistent food inflation and insecurity in key agricultural regions remain serious challenges.

Ebo Ayodeji of Optimus by Afrinvest highlights the role of currency stability and subdued energy prices in potentially lowering inflation. Meanwhile, Olaitan Sunday of Rostrum Investment points to improved food supply and FX policy interventions as reasons for an expected marginal decline. Nevertheless, both experts underscore the lingering structural issues—such as poor logistics, high transport costs, and insecurity—that could limit any significant reduction.

Executive banker Onche Samuel adopts a more optimistic view, forecasting inflation to drop to 22.0% due to the Central Bank’s tight monetary policies and a marginal appreciation of the naira. These factors have reportedly helped dampen core inflation, especially in sectors like pharmaceuticals and logistics. Still, he cautions that food inflation’s stubbornness could mute the impact of these improvements, with the pace of decline expected to slow compared to previous months.

Idris Adeniyi of Norrenberger Pension Limited presents a contrasting perspective, warning that June inflation may slightly exceed 23% due to a spike in food prices during the Eid-el-Kabir (Sallah) festivities. Livestock prices surged by over 35% during the period, significantly influencing short-term price movements. While fuel price hikes toward the end of June may not be reflected in the CPI data, early-month festive spending likely was.

Looking ahead to July 2025, analysts maintain a cautiously optimistic stance, though risks remain. If the naira stays stable and seasonal harvests improve, inflation may stay within current bounds. However, further naira depreciation, rising fuel prices, or worsening logistics due to peak rains could push inflation upward. Continued monetary tightening might help moderate these pressures, but food inflation remains a volatile and critical factor shaping Nigeria’s inflation trajectory.

Source: Nairametrics