Nigeria’s Inflation to Rise by 1700 Basis Points –AIICO Capital
Nigeria’s headline inflation rate for December 2025 would surge by at least 1700 basis points (bps) to a range of 31.4% and 32.4%, investment firm AIICO Capital Limited said, citing base effects and year end spending.
The projection suggests that Nigeria’s 8-month disinflation will be halted in December ahead of the statistic office report this week.
The market anticipates that the National Bureau of Statistics (NBS) will publish the Consumer Price Index (CPI) for the month of December 2025 on January 15, with consensus showing a significant uptrend in the inflation reading.
The expected CPI data will show how Nigeria has dealt with increase in goods and services over the past year since rebasing to December 2024 prices.
AIICO Capital Limited said its findings suggest that the headline inflation rate – which is a measure of the average change in the price level of both food and non-food items – will increase faster by a minimum of 1700 bps to a range of 31.4–32.4% year on year from 14.45% in the month of November.
“We believe the sharp increase will be largely driven by the base-year effect from both the core, or non-food items price, and food inflation.
“Our position is based on the base year effect on the components of the headline inflation – core and food inflation – as well as festive season spending on the overall price in December.
“Our analysis indicates that core inflation, which reflects changes in the average price of non-farm produce, is expected to ease by a minimum of 10bps to 1.0 – 1.2% m/m and increase by a minimum of 1510bps to 32.50 – 32.60% y/y”, the firm stated.
According to AIICO Capital, the month-on-month easing is expected to be driven by two major factors, Naira appreciation and reduced petrol price in December.
Analysts noted that the naira appreciated by ₦10.98 per dollar to ₦1,435.76 per USD at the official window, although it depreciated marginally by ₦5.00 to ₦1,475.00 per USD in the parallel market.
In addition, average petrol prices declined by 14.7%, from ₦890 per litre to ₦759.5 per litre, following a 16% reduction in gantry prices to ₦699 per litre by a major domestic refiner, Dangote Refinery.
The food inflation price index, which reflects changes in the average price of farm produce, is expected to increase by 5bps to a range of 1.2-1.5% m/m and by 1800bps 29.1- 29.9%y/y in December, compared to 1.1% m/m and 11.08%% y/y in November.
This acceleration would be driven by festive season effect and reduction in food supply chain amid dry season effect, AIICO Capital Limited said in its pre-inflation report. Analysts expect festive season and base year effect to push the inflation rate to a minimum of 1.1 -1.3% m/m and 31.4v– 32.4%y/y.
“In addition, the food inflation price index, which reflects changes in the average price of farm produce, is expected to increase by 5bps to a range of 1.2-1.5% m/m and by 1800bps 29.1- 29.9%y/y in December, compared to 1.1% m/m and 11.08%% y/y in November.
“This acceleration would be driven by festive season effect and reduction in food supply chain amid dry season effect. Overall, we expect festive season and base year effect to push the inflation rate to a minimum of 1.1 -1.3% m/m and 31.4v– 32.4%y/y”, AIICO Capital stated. Naira Climbs to N1,418 as Foreign Reserves Hits $45.623bn
