Nigeria’s Inflation Set to Hit 18% in January, Analysts Warn of Temporary Spike

Analysts have projected that Nigeria’s headline inflation could climb to around 18 per cent in January 2026, defying the downward trend seen throughout 2025. The rise is expected despite easing price pressures in the economy, as the base effects from the recent rebasing of the Consumer Price Index (CPI) by the National Bureau of Statistics (NBS) create a temporary spike.

The forecast comes ahead of the official CPI release, following a year of steady moderation in inflation. December 2025 ended with headline inflation at 15.15 per cent year-on-year, while the annual average slowed to 23.33 per cent from 33.18 per cent in 2024. Analysts credit the moderation to the Central Bank of Nigeria’s tight monetary policies and the methodological changes introduced by the NBS.

Food prices have shown significant improvement, with food inflation falling to 10.84 per cent year-on-year in December, down from 39.84 per cent the previous year. Staples such as tomatoes, garri, eggs, vegetables, beans, and grains saw price declines, reflecting better supply conditions, harvest gains, and relatively stable energy and exchange rates. Core inflation, which excludes volatile food and energy items, also eased to 18.63 per cent, indicating softer pressure on non-food items.

Energy costs have moderated, with diesel and petrol prices falling by 3.2 per cent and 11.8 per cent year-on-year, respectively. Cooking gas prices also decreased, enhancing household affordability. However, transport fares remain elevated. Domestic airfares spiked nearly 83 per cent month-on-month, while bus fares in cities rose by over 12 per cent, driven by festive demand and persistent pricing pressures.

Analysts at Cowry Research and Quest Merchant Bank warn that the lower CPI base will likely push headline inflation to between 17.8 per cent and 18.7 per cent in January, with election-related spending and fading base effects contributing to the temporary uptick. They project that inflation will resume a broadly downward path over 2026, supported by stable exchange rates, softer energy prices, and easing food costs.

source: Leadership