AGS NEWS – Nigeria’s inflation rate is expected to decline to 27.1% by the end of 2025, according to the NESG-Stanbic IBTC Business Confidence Monitor report.

The projection suggests that ongoing structural reforms are beginning to yield results despite lingering economic challenges.

Inflation has remained a major concern, with fuel costs and currency depreciation driving up prices. The report noted that inflationary pressures peaked in 2024 due to the removal of fuel subsidies and liberalisation of the foreign exchange market.

However, these pressures are forecasted to ease gradually in 2025, with a significant decline in inflation during the fourth quarter.

“Headline inflation is expected to average 30.5% in 2025 and settle at 27.1% by December, provided there are no unexpected shocks,” the report stated.

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The anticipated easing of inflation could also influence monetary policy, with the Central Bank of Nigeria potentially adopting a more accommodative stance and lowering interest rates to stimulate economic activity in late 2025.

Economic Activity Shows Modest Recovery
The report highlighted a slight recovery in business activity in December 2024, driven by festive demand. The Current Business Performance Index rose to +0.77, marking the first positive reading since September.

Agriculture led the recovery with a net balance of +13.93, while non-manufacturing industries also showed resilience. However, manufacturing, trade, and services sectors faced significant challenges.

The Future Business Expectation Index, which measures optimism about future conditions, stood at +28.61 in December 2024, indicating cautious optimism for early 2025, particularly in agriculture and non-manufacturing sectors.

Challenges Persist
Businesses continue to face high operational costs, frequent power outages, limited financing access, and complex tax regulations. The Cost of Doing Business Index rose by +50.32 in December, highlighting the mounting pressures on firms.

Despite these challenges, Nigeria’s GDP is projected to grow by 3.5% in 2025, up from an estimated 3.2% in 2024. Growth is expected to be driven by improvements in agriculture, manufacturing, and non-manufacturing sectors, as well as easing inflation and stabilised exchange rates, which are anticipated to boost consumer spending and economic activity.