Nigeria’s Inflation Expected to Ease Further as FX Stability and Harvest Season Boost Price Relief
Nigeria’s inflation may continue its downward trajectory in August 2025, driven by a more stable foreign exchange market and the arrival of the harvest season, according to a new report by Coronation Asset Management. The National Bureau of Statistics (NBS) is set to release the official August inflation figures today, and analysts expect the headline rate to register a fifth consecutive month of decline, signaling improved price stability for consumers and businesses.
The country’s inflation rate already dropped for the fourth straight month in July, easing to 21.88 per cent year-on-year from 22.22 per cent in June. This marks a significant turnaround from July 2024, when inflation peaked at 33.40 per cent, offering much-needed economic relief to households and producers. Food inflation also showed signs of softening, falling to 22.74 per cent in July compared to 39.53 per cent a year earlier, with staple foods such as rice, maize and vegetable oil seeing price moderation.
Core inflation—which strips out volatile food and energy costs—also eased to 21.33 per cent in July from 27.47 per cent a year earlier, while month-on-month growth slowed sharply to 0.97 per cent from 2.46 per cent in June. Coronation Asset Management projects that headline inflation in August could fall further to 21.45 per cent year-on-year, with month-on-month inflation moderating slightly to 1.74 per cent.
The firm attributes the projected slowdown to four main factors: higher food supply from early harvests of maize, groundnuts, pumpkins and vegetables in southern and middle-belt regions; moderating imported food inflation supported by a stronger naira, which closed at N1,531.57/$1 in August; modest declines in energy costs that ease production and transport expenses; and improved foreign exchange liquidity backed by stronger reserves of $41.27 billion. Together, these developments have bolstered market confidence and enabled the Central Bank of Nigeria to maintain near-term currency stability.
However, analysts warned that inflation risks remain. Rising fuel prices linked to disputes between Dangote Refinery and the petroleum workers’ union, as well as potential flooding that could damage farmlands and disrupt logistics, may slow the pace of disinflation in September. AIICO Capital added that if the downward trend in inflation persists, the Central Bank’s Monetary Policy Committee may be encouraged to consider a rate cut at its upcoming meeting later this month, a move that could influence borrowing costs and broader economic growth.
source: punch