Nigeria’s annual inflation slowed to 15.5% in December 2025, down from 17.3% in November, following a methodological revision by the National Bureau of Statistics (NBS) in calculating consumer prices.
The bureau replaced the single-month reference point, set as December 2024 during last year’s rebasing, with a 12-month index reference period averaging all months of 2024 — a shift aimed at avoiding an artificial spike in last month’s headline inflation reading.
“The December 2025 year-on-year headline inflation rate, including all other sub-indexes, was obtained through maximisation of the index reference period, that is, using a 12-month index reference period where the average CPI for the 12 months of 2024 is equated to 100,” the NBS said in its latest report released on Thursday. “This departs from the single-month reference, which would have produced an artificial spike in the December 2025 inflation rate.”
The bureau further clarified that the projected high implied under the single-month reference would have been a base-effect artefact, reflecting methodology rather than actual price movements.
Nigeria’s revised December figures align with trends in other major African economies including Ghana and Ethiopia.
Consumer prices in Ghana eased to 5.7% last month, marking the 12th consecutive month of decline, while Ethiopia recorded 9.7%, its first single-digit reading in 18 years reflecting moderating food prices amid ongoing economic reforms.
Analysts say the convergence signals a broader disinflationary trend across key African economies, even as global price pressures remain elevated.
Disinflation trend remains intact
Despite the recalibration, Nigeria’s downward inflation trend throughout 2025 persisted. Headline inflation fell from 27.6% in January, confirming that price pressures have been easing structurally.
On a month-on-month basis, inflation slowed to 0.54% in December from 1.2% in November, indicating genuine cooling in prices toward year-end. Food inflation, which accounts for roughly 43% of household spending, fell sharply to 10.84% year-on-year from 39.84% in December 2024. Monthly food prices declined by 0.36%, led by staples including tomatoes, garri, eggs, millet, plantain, potatoes, and onions.
Core inflation, excluding volatile food and energy items, moderated to 18.63% year-on-year from 29.28%, while month-on-month core inflation slowed to 0.58% from 1.28%. The broad-based easing indicates that price growth is slowing across both food and non-food sectors, reinforcing the credibility of the disinflation trend.
Why the re-referencing matters
Prior to the re-referencing, economists had projected that December inflation could jump as high as 30% driven by base-effect.
Without the NBS adjustment, businesses might have preemptively raised selling prices, anticipating higher input costs, while investors could have misinterpreted the spike as a signal for tighter monetary policy, potentially affecting financial markets and investment decisions.
By smoothing the CPI figures, the NBS provides a clearer view of price trends, allowing businesses to plan production, pricing, and inventory more accurately. Markets now have a more reliable gauge of inflation momentum, reducing uncertainty for decision-making.
Policy outlook
The CPI overhaul also provides guidance for monetary policy, giving the Central Bank of Nigeria (CBN) more flexibility to consider easing rates at its February meeting.
This would contrast with the cautious stance in 2025, when rates remained largely unchanged except for a 50-basis-point cut in September, despite the ongoing disinflation trend.
The apex bank expects the downward momentum in inflation to extend into 2026, supported by lower food and fuel prices and a more stable naira. In its 2026 Macroeconomic Outlook for Nigeria, the CBN projects that headline inflation will decelerate to 12.94%, down from an estimated 21.26% in 2025, as the effects of earlier monetary tightening filter through the economy and supply-side pressures ease.
By recalibrating the CPI, the NBS gives businesses, investors, and policymakers a clearer view of underlying price trends, reducing uncertainty and improving the basis for economic decision-making.
