Nigeria’s year-on-year inflation rate could fall to a single digit by January 2026, following the recent rebasing of the Consumer Price Index (CPI) and a sustained deceleration in monthly price increases, according to Ayo Teriba, chief executive of Economic Associates.
In an analysis of the rebased CPI series published by the National Bureau of Statistics (NBS), Teriba said the statistical reset, combined with easing monthly inflation momentum, points to a continued moderation in headline inflation over the next 12 months.
CPI Rebasing Resets Inflation Base
Nigeria’s inflation data were rebased in January 2025, shifting the base year from 2009 to 2024. The rebasing lowered the headline inflation rate for December 2024 to 28.48 percent, down from levels above 34% recorded under the old series.
Under the revised methodology, the CPI index stood at 116.7 in December 2024 and fell to 110.7 in January 2025, resulting in a month-on-month deflation of about 5.2 percent.
Teriba said the sharp January decline largely reflected the rebasing effect rather than an abrupt collapse in prices, but stressed that it nonetheless marks a turning point in the inflation trajectory.
Monthly Inflation Momentum Has Weakened
Beyond the base-year adjustment, Teriba noted that monthly inflation has moderated significantly. Under the old CPI series, month-on-month inflation peaked at 10.7 percent in January 2025. Since then, price pressures have eased, reinforcing expectations of continued disinflation through the year.
He argued that the slowing pace of monthly price increases suggests that inflation is no longer accelerating, even as absolute price levels remain elevated.
Inflation Could Near 12% by End-2025
Based on the revised data, Teriba projected that the deceleration triggered by the CPI rebasing should persist until December 2025, bringing headline inflation closer to 12 percent by year-end.
He added that the full effect of the largest CPI deceleration would materialise in January 2026, when base effects are expected to push the year-on-year inflation rate into single-digit territory.
“The key point is that the rebased CPI reveals a clearer picture of inflation dynamics, showing that the worst of the acceleration phase is behind us,” Teriba said.
Disinflation Not Driven by Economic Contraction
Addressing concerns that the recent inflation slowdown reflects weakening demand or economic contraction, Teriba said the disinflation trend began in December 2024, before the rebasing took effect, and continued into early 2025.
This, he argued, indicates a genuine easing in inflationary pressures rather than a purely statistical outcome of the rebased CPI.
Call for Greater CPI Transparency
Teriba acknowledged lingering ambiguity in the CPI data, particularly the absence of a published month-on-month inflation figure for January 2025, and urged the NBS to clarify missing data points.
Greater transparency, he said, would strengthen policy credibility and improve investor confidence in Nigeria’s macroeconomic indicators.
Macro Implications for Nigeria
Nigeria’s inflation surge over the past two years has been driven by currency depreciation, fuel subsidy removal, food supply disruptions, and rising import costs. While food inflation remains elevated across retail outlets, Teriba said the slowing pace of price increases supports expectations of further moderation.
A return to single-digit inflation would represent a major macroeconomic milestone for Africa’s largest economy, potentially easing pressure on household incomes, allowing for interest-rate normalisation, and improving investor sentiment after several years of price instability.
