Tony Chukwunyem 
Nigeria’s inflation rate likely fell to 23.2 per cent in May this year from 23.71 per cent in April, analysts at Financial Derivatives Company (FDC) have said.
The analysts who stated this in a report, released over the weekend, also projected that inflation could moderate further to about 20 percent in December. If their prediction for May proves accurate, it will be the second consecutive monthly decline in the inflation rate.
Following the National Bureau of Statistics’ (NBS) rebasing of the Consumer Price Index (CPI), the country’s headline inflation rate fell sharply from 34.80 per cent in December 2024 to 24.48 per cent in January 2025.
The rate fell further to 23.18 per cent in February and while it rose slightly to 24.23 per cent in March, it resumed its downward trend in April, falling to 23.71 per cent.
According to the FDC analysts, the recent downward trend in the inflation rate has been, “supported by exchange rate stability and easing logistic costs.”
Indeed, the analysts also said that they expect inflation to drop further to 23.15 per cent in June, adding that, “the naira is likely to trade between N1,600– N1,650/$, reflecting improved FX market stability.”
Other projections made by the analysts include that the country likely recorded 3.4 percent real Gross Domestic Product (GDP) growth in Q1’25; Nigeria’s oil production will increase to 1.5mbpd and the Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC), “will likely cut the policy rate by 50bps to stimulate growth.”
However, the analyst warned that with the fiscal deficit expected to increase despite tax efficiency, “every one per cent increase in fiscal deficit will have a knock-on effect on inflation by 0.15 per cent.”
Noting that, “more government spending increases demand and may drive prices up, especially when output is constrained,” the analysts stated that, “if deficits are monetized (CBN prints money), inflation rises faster,” adding that, “higher deficits may weaken the naira (thereby) increasing imported inflation.”
