Nigeria’s Inflation Drops to 15.15% in December 2025 as Food Prices Ease; Structural Hurdles, other Concerns Persist

The Centre for the Promotion of Private Enterprise (CPPE) noted Nigeria’s inflation showed significant moderation in late 2025 due to currency stability and reforms, with projections for continued easing into 2026, though challenges like high energy costs and limited finance persisted, prompting CPPE to urge focused interventions in infrastructure, credit access, and energy to translate macroeconomic stability into tangible welfare gains and sustainable growth.

A statement issued by Dr Muda Yusuf Chief Executive Officer, Centre For The Promotion Of Private Enterprise [CPPE] on policy brief on Nigeria’s December 2025 inflation noted that Nigeria’s inflation declined to 15.15% in December 2025, extending the disinflation trend recorded over the past 12 months. The moderation has been driven largely by falling food prices, which has provided some relief to households.

Yusuf, highlighted, however, that recent changes in the methodology for computing the Consumer Price Index (CPI) have raised concerns about the credibility of the inflation data. Although this has not materially affected the disinflation trend over the past 12 months.

“While inflation is easing, the structural drivers of high costs — especially energy, transportation, logistics, and insecurity — remain firmly in place.

“At the same time, the sharp decline in food prices has created serious concerns about the sustainability of farmers’ investments, as their returns are being eroded. Addressing both affordability for consumers and investment viability for producers is now an urgent policy priority. The good news is that the Coordinating Minister for the Economy, Mr Wale Edun, has indicated that the government is addressing this challenge,” he added.

Key CPPE Stance on 2025 Inflation:

• Headline inflation: 15.15% in December 2025
• Month-on-month inflation: 0.54%, down from 1.22% in November
• Food inflation: 10.84%, with food price deflation of 0.36%
• Core inflation: 18.63%, higher than 18.04% in November
• Major inflation drivers: Food & beverages, housing, restaurants, transportation, and fuel — accounting for 72% of inflation pressure

Macroeconomic Context

Inflation is Moderating, but Data Credibility is Weakening

The decline in inflation suggests that macroeconomic stabilization efforts are beginning to take effect. However, adjustments to CPI computation parameters have created credibility gaps, undermining the confidence of investors, analysts, businesses, and policymakers.

Policy Focus: Strengthen the technical capacity and analytical rigour to rebuild trust in statistical outcomes.

Food Inflation is the Primary Driver of Relief

Food inflation fell sharply to 10.84%, and month-on-month food prices contracted. This has been the single biggest contributor to easing the cost-of-living pressures on Nigerian households.

Policy Focus: Sustain agricultural supply and reduce logistics costs to maintain this momentum.

Rising Core Inflation is a Key Concern

Despite exchange-rate stability, core inflation increased to 18.63%. This is inconsistent with macroeconomic fundamentals and suggests deeper structural pressures or possible statistical inconsistencies.

Policy Focus: Review and improve CPI methodology to ensure alignment with economic realities.

Inflation Pressure is Highly Concentrated

Food, housing, utilities, fuel, and transportation remain the dominant contributors to inflation, reflecting the sectors where Nigerians spend the bulk of their income.

Policy Focus: Target cost reductions in these sectors to accelerate disinflation and improve affordability.

Structural Drivers Still Undermining Price Stability

Persistent structural challenges continue to drive inflationary pressure:

• High energy and fuel costs
• Rising transportation and logistics expenses
• Insecurity affecting agricultural output
• High interest rates and cost of credit
• Import duties on key production inputs

Policy Focus: Tackling these legacy constraints is essential for making the disinflation trend sustainable.

Affordability vs. Farming Investment Viability: A Critical Policy Dilemma

While consumers benefit from lower food prices, farmers face declining incomes amid rising input costs. This risks discouraging agricultural investment and threatening long-term food security.

Policy Focus:

• Reduce the cost of fertilizers, agrochemicals, and machinery
• Expand irrigation and mechanization support
• Introduce a minimum guaranteed pricing framework for staple crops

Such measures will restore the confidence of farmers in profitability prospects while sustaining affordability for households.

Policy Coordination is Essential

Sustaining the inflation decline requires closer alignment between fiscal and monetary authorities. Structural interventions must complement monetary tightening to reduce inflation without weakening production.

Recommendations

For Government

• Intensify efforts to reduce the cost of food, transportation, and utilities
• Address insecurity to boost agricultural supply
• Reduce input costs for farmers
• Provide guaranteed minimum pricing for key crops
• Lower import duties on manufacturing inputs
• Strengthen fiscal–monetary policy coordination

For the National Bureau of Statistics

• Strengthen institutional capacity for data accuracy and quality assurance
• Improve technical and analytical rigour in CPI computation
• Rebuild public and investor confidence in statistical outcomes.

Conclusion

The CPPE concluded that the December 2025 inflation data confirms that Nigeria’s inflation is moderating, driven largely by food price declines, adding that this is a positive development for households and economic stability.

It affirmed however, that sustaining this progress requires urgent action to address structural cost pressures, support agricultural producers, and restore confidence in inflation data, stressing that without these measures, the gains in affordability and price stability may not endure.