Nigeria’s inflation rate is projected to rise to 32.34% year-on-year in December 2025 as increased demand during the holiday season and the statistical effects of the recalculated consumer price index combine to increase price pressures.
Stanbic IBTC Bank analysts also expect the month-on-month inflation rate to be 1.44%, which corresponds to the CPI level of 132.34 for the month.
The forecast is included in the latest Stanbic IBTC Bank Nigeria Purchasing Managers Index (PMI) report compiled by S&P Global, which tracks private sector business conditions.
The bank’s research team said the expected rise in inflation reflects higher spending patterns in December, particularly on consumer goods and services, along with the underlying effect of the rebased CPI from a year ago.
This means the year-over-year numbers could look significantly higher than what the underlying monthly changes alone would suggest.
What the report says
Commenting on the report, Muyiwa Oni, Head of West Africa Equity Research at Stanbic IBTC Bank, said: “Overall input prices (64.4 vs. November: 61.9) have declined from almost five-year lows recorded in November. “Although it rose significantly in February, inflation was weaker than the average for 2025. This higher input cost also led to higher selling prices in December, with the manufacturing sector seeing the most significant price increases.”
He added that the increased inflationary pressure in December could be related to increased spending patterns associated with the December festive period.
“Inflation should therefore rise month-on-month and year-on-year in December, but the year-on-year increase is likely to be significant due to the lower base effect from the same period a year ago (as a result of the country’s rebased CPI).”
“Therefore, we estimate the inflation rate to be 1.44% month-on-month. This means that December’s CPI will be 132.34% and the headline inflation rate will be 32.34% year-on-year,” he said.
Business activity remained positive at the end of 2025, despite the prospect of rising costs. The composite PMI for December was 53.5, only slightly lower than November’s 53.6, indicating that business conditions in the private sector are once again steadily improving. A PMI reading above 50 indicates economic expansion.
December marked the 13th consecutive month of increase, roughly in line with the average trend for the year. Production expanded in all four monitored sectors, primarily agriculture, while customer demand strengthened and new orders increased further.
In response to the increase in sales, companies have stepped up purchasing activities and increased inventory.
However, employment growth remained modest, the weakest growth since June 2025. Companies also recorded a further increase in unfinished work due to power constraints and material shortages.
Business confidence recovers strongly
One notable development was the marked improvement in business confidence, which rose to its highest level in six months. Some 59% of companies surveyed expect output to increase next year, supported by plans such as business expansion, new branch openings and increased export activity.
Supplier delivery times improved again, but at the slowest pace in six months, with some companies citing road issues and others reporting faster delivery times related to faster payments and reduced traffic bottlenecks.
Beyond the immediate inflation outlook, the bank’s research team forecasts GDP growth of 3.8% in 2025 and 4.1% in 2026. The manufacturing and services sectors are expected to further expand due to government investment programmes, trade facilitation initiatives and the forward linkage effect of the Dangote refinery on related industries.
Exchange rate stability and the potential for interest rate easing are also expected to support consumer spending and business investment into 2026, provided inflation subsequently trends downward.
What you need to know
Nigeria’s headline inflation rate slowed to 14.45% in November 2025, a significant deceleration from the 16.05% recorded in October 2025, according to figures released by the National Bureau of Statistics (NBS).
The decline of 1.6 percentage points from the previous month suggests that price pressures across the economy are easing after months of high inflation.
NBS also noted that headline inflation decreased compared to the same month last year, although this comparison was based on a different base year (November 2009).
