NIGERIA’S headline inflation rose to 15.5 percent in December after the National Bureau of Statistics (NBS) adjusted the data framework used to measure household spending, a move aimed at better capturing prevailing economic conditions.
Statistician-General of the Federation, Prince Adeyemi Adeniran, said the bureau would publish both the adjusted headline figure that reflected economic fundamentals and the higher, base-effect-inflated number to ensure transparency in the transition.
Ahead of the release, several analysts had expected a sharp jump in December’s inflation reading, up to 32.1 percent, driven largely by a low base effect following the statistical rebasing carried out in December 2024.
CardinalStone analysts explained in their 2026 outlook that the December 2024 rebasing created an unusually low comparison base, which could temporarily push the December 2025 headline rate to about 32.1 percent before easing from January 2026. They projected average inflation of 22.0 percent in 2025, down from 31.69 percent in 2024.
Meristem Stockbrokers echoed this view, noting that inflation was expected to resume a downward trajectory after a one-off spike to around 32 percent in December 2025.
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Contrary to these projections, official data showed that Nigeria’s Consumer Price Index (CPI) recorded its first increase in 10 months, rising to 15.5 percent in December 2025 from 14.45 percent in November.
The uptick was largely driven by core inflation pressures. While food inflation slowed to 10.84 percent from 11.8 percent, core inflation climbed to 18.63 percent, up from 18.04 percent in the prior month.
On a month-on-month basis, inflation eased to 0.54 percent from 1.2 percent, reflecting a sharp slowdown in food prices, which declined by 0.36 percent compared with a 1.13 percent increase in November.
Under the revised approach, the base index for CPI calculations has been reset from the previously equated December 2024 = 100 to the average price level across the 12 months of 2024. This means December 2025 prices are now compared against the 2024 annual average rather than a single low-base month.
The NBS said the change reduced distortions caused by base effects and ensured year-on-year inflation figures more accurately reflected actual price movements. The agency added that revisions to earlier months’ CPI data would be announced later to maintain consistency.
According to the bureau, retaining December 2024 as the sole base would have exaggerated the December 2025 inflation rate and produced a misleading spike. It stressed that the adjusted figures better represent current economic realities and noted that base-effect corrections are standard practice globally.
Why inflation is declining
Economists have adduced reasons why inflation is dropping in Nigeria. First is the massive food importation embarked upon by the Nigerian government in 2024 in the face of escalating inflation. With Nigeria’s headline inflation rate at 33.40 percent in July 2024, the Nigerian government began the implementation of the zero percent import duty and exemption of value-added tax on basic food items.
In the circular entitled, ‘Approval for the implementation of zero percent duty rate on basic food items,’ the Nigeria Customs Service (NCS) said the Ministry of Finance had sent a letter to the service, informing the agency that President Bola Tinubu had approved the implementation.
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The letter dated August 14, 2024, and signed by the Deputy Comptroller-General, C.K Niagwan, noted that the food commodities involved included maize, husked brown rice, wheat, grain beans, and millet.
The circuar read, “I am directed to forward herewith a copy of the Federal Ministry of Finance letter, confirming His Excellency, Mr President’s approval for the implementation of zero per cent duty rate and Value Added Tax exemption on some basic food items.
“You are to note the following, ‘the policy is restricted to the items listed in the letter and it is effective July 15, 24 until December 31, 24. The importation of these items shall be limited to investors with milling capacity and a verifiable Backward Integration Programme for some of the items.”
The food importation has continued up to this moment, thereby favourably competing with products of local farmers. Hence a combination of imports and inproved harvests have contributed to creating glut in some food markets.
“Farmers are complaining that they produce but cannot sell due to food glut. However, to the consumer, this is somehow great news because, once again, he can afford basic food items, thanks to this policy,” said a Lagos-based economist, Mr John Ewa.
“Secondly, there have been better harvests and supply chain improvements.” He also noted that the inflation decline was also driven by the recent rebasing.
“Another reason is the base effect. Rebasing changes weights and sometimes the basket of goods used in calculating inflation. The overall effect is that it lowers the headline figure.”
Yet another reason for the declining inflation is the increased local petrol refining, led by Dangote Petroleum Refinery, which is ramping up output. With increased local refining and lower imports, the price of petrol has moderated in recent times, falling from a peak of over N1,000 per litre last year to the gantry price of N699 per litre this week.
Chief Executive Officer of Financial Derivatives, Mr Bismark Rewane, said that fallling inflation was fuelled by a firm disinflationary stance by the Central Bank of Nigeria (CBN), improvements in domestic refining capacity that could reduce volatility in fuel prices, stronger manufacturing output, rising productivity, and reforms aimed at lowering logistics and supply-chain costs.
With inflation easing, he noted an improvement in household purchasing power, which could, in turn, boost demand across retail, services and industrial sectors.
