The NESG-Stanbic IBTC Business Confidence Monitor (BCM) report has projected a hopeful decline in Nigeria’s inflation rate to 27.1% by December 2025, offering a much-needed ray of optimism for both businesses and consumers grappling with persistent economic struggles.
This projection signals cautious optimism as structural reforms begin to take hold, despite ongoing challenges such as rising fuel prices and currency depreciation. Inflationary pressures have been particularly acute in 2024 due to the removal of fuel subsidies and the liberalization of the foreign exchange market, which pushed costs across various sectors.
According to the report, while inflation will remain high in the first nine months of 2025, it is expected to ease significantly in the final quarter. By December 2025, inflation is projected to decrease from an average of 30.5% year-on-year to 27.1%, driven by improved fiscal management, better exchange rate stability, normalization of petrol prices, and increased agricultural output.
“We expect headline inflation to remain sticky in 9M:25 but settle below 30.0% from September 2025 as high petrol costs get smoothed out of the year-on-year headline inflation, barring any unexpected negative shocks to petrol prices,” the report noted.
This easing of inflation could potentially influence monetary policy, with the Central Bank of Nigeria’s Monetary Policy Committee (MPC) likely to adopt a more accommodative stance in late 2025. A reduction in interest rates could stimulate economic activity and help businesses cope with high operational costs.
In terms of business performance, the report highlighted slight signs of recovery in December 2024, thanks largely to seasonal demand. The Current Business Performance Index rose to +0.77, up from -2.74 in November. Business confidence remained cautiously optimistic, with the Future Business Expectation Index settling at +28.61, a slight dip from +33.17 in November but still reflecting positive sentiment.
However, businesses continued to face significant challenges, including high operational costs, power shortages, insecurity, and limited access to financing. While credit access showed slight improvement, the high cost of borrowing remained a major hurdle to investment and expansion.
Despite these challenges, there is renewed hope that improved economic conditions will foster growth in key sectors such as agriculture, manufacturing, and non-manufacturing in the first quarter of 2025.