By Abigail Philip David
Nigeria’s inflation rate is expected to decline to 27.1% by December 2025, according to the latest NESG-Stanbic IBTC Business Confidence Monitor (BCM) report. This projection signals potential relief for businesses and consumers grappling with prolonged economic challenges, suggesting that ongoing structural reforms are beginning to yield positive outcomes despite persistent hurdles.
Inflation remains a major concern for Nigeria’s economy, fueled by rising fuel costs and currency depreciation, which have increased expenses across various sectors. The report highlighted that inflationary pressures intensified in 2024 due to the removal of fuel subsidies and the liberalization of the foreign exchange market.
However, the BCM anticipates a gradual reduction in these pressures throughout 2025. It predicts that while headline inflation will stay high during the first nine months of the year, a significant decline is expected in the fourth quarter.
The report stated, “We expect headline inflation to remain sticky in the first nine months of 2025 but drop below 30% from September, as the impact of high petrol costs diminishes in year-on-year comparisons, barring any unexpected shocks to fuel prices. Based on our outlook on the USD/NGN exchange rate, fiscal deficits, and food supply, we forecast headline inflation to average 30.5% in 2025 and fall to 27.1% by December.”
This projected easing of inflation is also likely to influence monetary policy. The report suggests that the Central Bank of Nigeria’s Monetary Policy Committee may adopt a more supportive approach by late 2025, possibly lowering interest rates to stimulate economic activity.
Business Activity Sees Modest Recovery
In December 2024, business performance showed slight improvement, driven by seasonal festive demand. The Current Business Performance Index rose to +0.77, a rebound from -2.74 in November, marking the first positive reading since September 2024 and reflecting a modest recovery in economic activity.
However, sectoral performance was uneven. Agriculture led with a net balance of +13.93, boosted by harvest season activities and rising demand for produce. Non-manufacturing sectors also showed resilience, recording a net balance of +5.80. In contrast, manufacturing, trade, and services sectors continued to face significant challenges.
The Future Business Expectation Index, which gauges business optimism, stood at +28.61 in December 2024, slightly lower than +33.17 in November. Despite this dip, the index reflects cautious optimism for improved business conditions in early 2025, especially in agriculture, manufacturing, and non-manufacturing sectors.
However, several factors continue to dampen business confidence. High operational costs driven by inflation and exchange rate volatility, frequent power outages, and reliance on expensive alternative energy sources have strained businesses. Insecurity, limited access to financing, and complex tax regulations further exacerbated the situation.
Although access to credit slightly improved in December, with a net balance of +8.25, high borrowing costs remained a significant obstacle to investment.
Economic Outlook for 2025
The report also highlighted ongoing structural issues that hinder economic growth. The Cost of Doing Business Index jumped by +50.32 in December, reflecting mounting pressures on companies.
Despite these challenges, the BCM report presents a cautiously optimistic outlook for 2025. Nigeria’s GDP is projected to grow by 3.5% in 2025, up from an estimated 3.2% in 2024. This growth is expected to be driven by improvements in agriculture, manufacturing, and non-manufacturing industries.
Easing inflation and a more stable exchange rate are anticipated to support consumer spending and overall economic activity, providing hope for a gradual economic recovery.
