- Forex, petrol reduction cut costs
Inflationary pressure has reduced further as improved macroeconomic stability and gains in the foreign exchange and petroleum sector continue to support reduction in average costs of goods and services.
Economic intelligence reports by many economic and finance firms surveyed yesterday by The Nation indicated that headline inflation dropped for the third consecutive month in June 2025.
Ahead of tomorrow’s official release of the Consumer Price Index (CPI) report by the National Bureau of Statistics (NBS), analysts were unanimous that stability in the foreign exchange (forex) market, reduction in price of premium motor spirit, popularly known as petrol and other monetary and fiscal policies sustained disinflationary trend.
Independent consumer surveys and econometric models indicated that headline inflation dropped by some 60 basis points to around average of 22.30 per cent for June 2025, from 22.97 per cent in May 2025, its third consecutive decline.
Headline inflation rate had improved by 52 basis points to 23.71 per cent in April 2025 on the back of reduced food inflation. Composite inflation had for the first time after the January 2025 rebasing, risen by 105 basis points to 24.23 per cent in March 2025 as against 23.18 per cent recorded in February 2025.
The NBS had in January updated the weight and price reference periods in calculation of the CPI to make the inflationary gauge more reflective of changes in consumption patterns and the economy generally. The rebasing not only brought the base year closer to the current period, from 2009 to 2024, it also introduced some critical methodology changes to improve the computation processes.
After the rebasing, inflation dropped from 34.80 per cent in the pre-rebased period of December 2024 to 24.48 per cent in January 2025.
Bismarck Rewane’s Financial Derivatives Company (FDC) said inflation is expected to ease to 22.65 per cent in June, from 22.97 per cent.
FDC attributed the reduction to a combination of factors, including a N100 reduction in PMS price, relative stability in the naira exchange rate, and a decline in money supply growth.
FDC however expected food inflation to rise by 0.42 per cent to 21.56 per cent from 21.14 per cent. Core inflation is projected to decline by 1.34 per cent to 20.94 per cent from 22.28 per cent.
“The inflation numbers could have been worse if not for the relative stability of the exchange rate,” FDC noted.
FDC noted that further cut in ex-depot price by Dangote Refinery could further exert downward pressure on pump prices and potentially ease inflation.
Afrinvest West Africa said inflation could drop as low as 22.2 per cent in June 2025.
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“Our view for the inflation projection is hinged on two major drivers. Firstly, the effect of the CBN’s strategic policy reforms has seen the naira strengthen in the month of June, up 3.6 per cent to close at N1,529.71. Secondly, the high base year effect from last year’s 34.2 per cent inflation reading is a contributing factor,” Afrinvest stated.
Senior Market Analyst, FXTM, Lukman Otunuga said the June CPI data is expected to show signs of cooling inflationary pressures.
He said continuing disinflation could offer some relief to the CBN which aggressively hiked interest rates throughout 2024.
Otunuga projected that inflation could drop to 21.4 per cent in June 2025.
He said the decline was aided by the recent gains in the naira amid higher non-oil exports and a weaker dollar.
Cordros Capital also projected that consumer price inflation would ease further in June.
“The recent stability of the naira should help moderate imported food prices, partly offsetting the upward pressure on overall food inflation which stems from the ongoing planting season and resultant shortage of farm output. Meanwhile, core inflation is likely to continue its downward trend, supported by stable energy prices and limited exchange rate pass-through,” Cordros Capital stated.
Analysts at CardinalStone said they expected inflation to moderate further in June, citing “continued stability in core components and supported by a stable forex and transport backdrop”.
Analysts said Dangote Refinery’s planned rollout of PMS and AGO distribution—targeting large-scale users such as marketers, petrol dealers, manufacturers, telecom firms and aviation with free logistics—and its investment in 4,000 CNG-powered tankers should ease energy distribution bottlenecks.
“This development could exert further downward pressure on energy prices, reinforcing the disinflationary trend,” CardinalStone stated.
Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun and the Governor of the Central Bank of Nigeria (CBN), Mr Olayemi Cardoso had met recently as part of efforts to deepen fiscal and monetary policy coordination and consolidate the gains of the macroeconomic reforms.
The meeting between the two leading members of the economic management team focused on strategies to consolidate the continuing improvements in prices.
The meeting also addressed ways to ensure that macroeconomic gains are not only sustained but translated into tangible benefits for the broader economy.
According to the statement issued after the meeting, the meeting reviewed ongoing policy reforms and examined how closer coordination between fiscal and monetary levers can help stabilise prices, restore investor confidence, and unlock new pathways for private-sector-driven growth.
The Lagos Chamber of Commerce and Industry (LCCI) however called for an urgent need for the government to scale up support for dry season farming, irrigation infrastructure, and mechanization to reduce Nigeria’s dependence on rain-fed agriculture.
LCCI stated that the government must remain focused on dealing with the challenges around food movement from the farms to the cities. Address inefficiencies in transporting goods particularly food from rural to urban markets can help lower market prices and reduce post-harvest losses.
“While the easing inflation rate is a welcome development, Nigeria must not lose momentum in addressing the structural drivers of inflation. The Lagos Chamber of Commerce and Industry urges the government to act decisively in tackling insecurity, investing in resilient agricultural infrastructure, and improving policy coordination to ensure the current progress becomes sustainable and inclusive,” LCCI stated.