Economists and finance experts yesterday said continuing deceleration of the inflationary pressure and improvement in average costs of goods and services holds significant positive momentum for the economy.
Ahead of the release of the Consumer Price Index (CPI) Report today by the National Bureau of Statistics (NBS), independent consumer surveys and econometric models surveyed yesterday were unanimous that inflation rate could drop for the fifth consecutive time.
Economic intelligence reports by economic and finance firms surveyed by The Nation indicated that headline inflation rate dropped by more than 45 basis points to about 21.40 per cent in August, from 21.88 per cent.
Experts attributed the continuing decline in inflationary pressure to macroeconomic gains and emerging stability in the overall economy.
They however called for more deliberate policies to widen the benefits of the macroeconomic gains on the generality of the people.
Experts who spoke included Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf; Managing Director, Financial Derivatives Company (FDC), Mr. Bismarck Rewane; Managing Director, Arthur Steven Asset Management, Mr. Olatunde Amolegbe; Chairman, Nigeria Economic Summit Group (NESG), Mr. Niyi Yusuf and Managing Director, HighCap Securities, Mr David Adonri.
Read Also: Top 10 largest markets to buy foodstuff in Lagos
Economic and finance think-tanks that also contributed included Coronation Capital Group, Cordros Capital Group, SCM Capital, CardinalStone and Afrinvest West Africa among others.
The NBS reported that headline inflation rate eased by 34 basis points to 21.88 per cent in July from 22.22 per cent in June. It was the fourth consecutive decline. Inflation rate had dropped from 22.97 per cent in May to 22.22 per cent in June, an improvement of 75 basis points.
The July inflation report showed that core inflation, which excludes volatile agricultural produce prices and in energy, decreased to 21.33 per cent in July, compared with 22.76 per cent in June. However, the composite food index increased to 22.74 per cent in July 2025 as against 21.97 per cent in June 2025.
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.
Muda Yusuf said the consistent deceleration in inflation rate is a very good development for the economy.
According to him, the disinflationary trend is a reflection of an improvement in the macroeconomic environment, which is good for investors’ confidence.
He said: “The disinflationary trend is also an indication of improving stability in the microeconomic environment, which is good for planning and for investors’ confidence. It enhances the prospect of increasing level of investments, both from domestic investors and for foreign investors. Deceleration in inflation is a very important indicator that the macroeconomic environment is improving.
“But in order for this improvement to reflect in welfare, we need to do a lot more. Because what we are seeing is a deceleration in headline inflation. We need to see a faster deceleration in food inflation in particular. That is extremely very important. Not just food inflation, but also other basic needs like pharmaceutical products, transportation, energy costs, cooking gas, and things like that. These are basic things that touch the welfare of the people. So at the macro level, we are seeing an improvement in terms of prices. But there has to be some deliberate policy measures that will be targeted at specific product range to deepen the impact.
“This will require a combination of policies, both monetary policy and fiscal policy, and even tax policy, to be able to effectively ensure that this drop in inflation is reflected in the welfare of the people. It’s not just something that monetary policy alone can tackle, it’s something that needs very strong handshake. Beyond the handshake, independent policy instruments, fiscal policy instruments will be activated to address the issue of welfare”.
Muda Yusuf said the more effective way to get the macroeconomic gains to the ordinary people is to reduce the benchmark interest rate in targeted approach to addressing the issue of cost of production of those items that are consumed by the ordinary citizens.
Rewane said the Central Bank of Nigeria (CBN) would likely cut the benchmark rate by 25 basis points at its meeting next week. The current benchmark rate is 27.50 per cent.
The Monetary Policy Committee (MPC) of the CBN-the highest policy-making organ of the apex bank, is scheduled to meet between September 23 and 24.
Rewane, who predicted that headline inflation rate would likely decline to 21.4 per cent in August, said the apex bank could be encouraged by sustained improvement in average price level.
According to him, the fourth quarter holds more positives for the economy with stable fiscal and monetary environment, continuing rally at the stock market, stability in the foreign exchange market and year-end upbeat across many sectors such as real estate and creative sectors.
“We expect Key policy changes, including the tax reforms, bank recapitalisation, and a possible Eurobond issuance to boost revenues, will remain top of the fiscal priority list,” Rewane stated.
He said positive momentum at the Nigerian Exchange (NGX) would continue on the back of strong corporate earnings and reduced foreign exchange (forex) losses.
“The exchange rate is likely to trade between N1,520 and N1,560 per dollar at the official and parallel markets as gross external reserves reach $42 billion and crude oil production reaches 1.8 million barrels per day (mbpd), narrowing the gap between the parallel and official window to N9,” Rewane stated.
According to him, December preparations from business owners will increase with the level of airport renovations to accommodate more travellers and higher ticket prices continuing while the creative economy step up preparations for its seasonal upbeat momentum, which is estimated to grow by nearly 10 per cent in fourth quarter 2025.
Niyi Yusuf said government needs to carefully balance policies to tame inflation while not choking credit and business growth.
According to him, while inflation is reducing, which is good for the economy, but it is reducing at a slow pace and unlikely to be below 20 per cent rate by end of year due to structural issues affecting agricultural outputs, post-harvest losses, transportation costs, and energy costs.
“The structural issues are unlikely to be fixed in the short term and hence the reduction in inflation rate is mainly driven by monetary tightening based on the high monetary policy rate of the CBN, which has also limited credit affordability due to high interest rate and has reduced credit growth to under three per cent. High cost of credit and low availability of credit is not good for businesses and production activities, especially micro, small and medium enterprises (MSMEs )and manufacturing enterprises.
“Social protection and targeted subsidies for the poor and vulnerable citizens must be rapidly expanded to increase coverage to meet the 25 million target. This will ease the burden on the most vulnerable,” Niyi Yusuf said.
Adonri said there were improvements especially in prices of some food stuffs but cost of transportation, building materials and several other goods and services remain sticky.
He cautioned that the risk of seasonality in agriculture coupled with intensified reign of terror by bandits are some of the threats faced by the economy which may deter the CBN from relaxing monetary policy.
“Due to the positive impact of domestic energy supply, if insecurity is dealt with and supply side policies are implemented, the disinflation trend can be sustained leading also to a non-inflationary growth of the economy wherein consumers can feel the improvement,” Adonri said.
Amolegbe, who projected that inflation could decline to 20 per cent by the fourth quarter, said stability in forex market, improvement in food production and increase in crude production could sustain disinflation.
“There is reason to be optimistic on the inflation outlook given the stable exchange rate, improved food production, improvement in crude oil production as well as improvements in provision of infrastructure,” Amolegbe said.
Coronation Group predicted that August inflation will show continuing disinflationary trend, with headline inflation easing to 21.45 per cent from 21.88 per cent in July.
“Our inflation projection for August 2025 is underpinned by four key factors. First, increased food supply from the early harvest, including maize, groundnuts, pumpkins, and vegetables, is expected to ease price pressures in the southern and middle-belt regions. Second, imported food inflation is likely to moderate, supported by naira stability, which closed marginally stronger at N1,531.57 per dollar in August, reflecting a mild appreciation of 0.44 per cent. Reduced forex volatility also helped lower import costs for processed and packaged foods.
“Third, energy costs declined modestly, easing production and transportation expenses, though some of this may be offset by persistent logistics issues. Lastly, robust forex liquidity, supported by stronger reserves, which rose by $1.91 billion to close at $41.27 billion, steady foreign portfolio inflows, and reduced global headwinds, has strengthened market confidence, enabling the CBN to intervene when necessary and sustain near-term currency stability,” Coronation Group stated.
Muda Yusuf also predicted possibility of a marginal rate cut by the apex bank as part of efforts to move from macro-level improvements to micro-level improvement.
“With the trend we are seeing, we expect a marginal rate cut by the central bank. That is to signal the fact that some of the major objectives of monetary policy are being achieved, and that it is time to begin to relax the monetary policy tightening. Because right now, the monetary policy rate is well above the inflation rate, which is, in a sense, something that is a bit curious. It’s not quite normal for the policy rate to be higher than the inflation rate. So, I think we are getting to the point where the CBN will begin to relax the monetary policy stance.
“And for government to deepen and sustain this disinflation, it has to look g beyond monetary policy and activate other direct policy instruments, particularly fiscal policy and tariff policy, and also addressing the issue of insecurity, and focusing on things that can improve productivity in the real sector. These are the things that can be done to bring down costs. Because all of these is about costs. So, we must do things to bring down cost of operation, cost of logistics, cost of production. That way, we’ll be able to sustain the trend of deceleration in inflation,” Muda Yusuf said.
Afrinvest noted that with the positive development in reduction in oil losses, with crude oil losses dropping to 16-year low, there are three major benefits to the macroeconomic dynamics.
“To start with, a relief in fiscal revenue is on the cards. Despite disparity in latest production levels and federal government’s budget benchmark-July crude oil production of 1.51mbpd and government’s budget of 2.01mbpd, as well as international price dynamics-September Average: $66.96/bbl, government Budget: $75.00/bbl, reduced losses from crude oil theft should translate to increased crude oil available for sales, thereby boosting FAAC allocations and limiting fiscal strain.
“Secondly, we expect to see a boost in forex liquidity and CBN’s external reserve. Crude oil exports (accounting for c.85.0 per cent of forex earnings remains Nigeria’s chief source of forex inflows. It is important to note that the Naira has strengthened in 2025 , up 2.4 per cent so far this year to N1,501.50 per dollar, largely driven by policy reforms from the CBN, as such higher export volumes should result in improved forex inflows, thereby easing pressure on the Naira.
“Finally, reduction in crude oil losses could boost investors’ sentiment in the oil and gas sector given the recent wave of divestment in the sector characterised by asset sales from IOCs to indigenous oil companies. A major driver of this trend was the persistent security and operational risks associated with oil theft and pipeline vandalism. Nevertheless, with crude oil losses now at historic lows, there is bound to be renewed optimism which could rekindle investment appetite in the upstream segment, strengthening output prospects, and reinforcing Nigeria’s fiscal and external buffers,” Afrinvest stated .
Meanwhile, SCM Capital had stated that it expected inflation rate to continue its gradual downward trend in August, supported by forex stability, tight monetary conditions from the CBN’s hold policy, and subdued energy prices.
Analysts however cautioned that food inflation remains a key risk, as persistent insecurity in major food-producing regions and rainy season logistics challenges could sustain upward pressure on prices.
“While base effects may moderate year-on-year inflation, supply chain disruptions could lift month-on-month readings. Economic reforms, food harvest, and CBN’s inflation anchoring policy are however expected to support the disinflation momentum,” SCM Capital stated.
CardinalStone also stated that inflation rate is expected to remain on its disinflationary path, aided by sustained declines in energy prices as the Dangote refinery maintains its distribution strategy, which removes transportation costs for fuel marketers and large-scale consumers.
Analysts noted that supports like the energy cost, could offset upward pressures from food inflation risks and seasonal forex demand during the summer months—a trend typically seen in the third quarter.
Cordros Capital Group stated that it expected headline inflation may moderate again in August.
“We anticipate that inflation will maintain its downward trajectory over the near term, supported by sustained naira stability, improved food supply, and moderate increases in energy prices.
“Notably, the naira has traded within the range of N1,520.00 per dollar and N1,545.00 per dollar so far in August, broadly in line with the previous month’s levels of N1,520.00 per dollar and N1,539.00 per dollar. This stability should keep the cost of imported goods steady and help anchor inflation expectations, which are often sensitive to exchange rate fluctuations.
“While energy prices remain somewhat volatile, the pace of increases has been far more moderate than in the same period last year, creating room for a continued decline in the year-on-year inflation rate, particularly for core inflation.
“For farm produce, supplies are expected to improve due to the onset of the green harvest, which typically peaks in August. This seasonal boost in availability is likely to exert downward pressure on farm produce prices, further easing food inflation in August.
“Consequently, we expect a further decline in the headline inflation rate in August, reflecting moderation in both food and core items,” Cordros Capital stated.
Analysts at Afrinvest West Africa stated that they expected inflation to maintain a gradual easing trajectory in the near term, supported by continued forex stability, early harvest inflows, and relatively subdued global commodity prices.
They however cautioned that persistent food supply constraints and seasonal factors could limit the pace of disinflation, keeping monthly inflation elevated in the months ahead.
