Inflation Seen Rebounding to 33.6% in December as Base Effects End Disinflation Run – Afrinvest

Nigeria’s headline inflation rate is projected to surge sharply to 33.6% in December 2025, bringing an abrupt end to an eight-month disinflation streak, as unfavourable base effects from last year’s CPI rebasing take hold, according to Afrinvest Limited.

Ahead of the National Bureau of Statistics’ inflation report, Afrinvest said its model indicates a steep reversal from the 14.45% reading recorded in November 2025, warning that the apparent easing of inflation seen through most of the year is likely to prove temporary.

Nigeria had recorded eight consecutive months of slowing inflation between April and November 2025, with the headline rate declining steadily from 24.2% year on year in March to 14.5% in November. Afrinvest noted that the November outcome was the lowest since the CPI rebasing in December 2024 and the softest inflation print since October 2020 under the old CPI framework.

Advertisement

However, the investment firm said the December rebound is largely explained by statistical base effects linked to the rebased CPI. The December 2024 rebasing significantly altered the inflation basket, with the weight of food and non-alcoholic beverages reduced to 40.1% from 51.8%, while energy declined to 6.4% from 10.8%. In contrast, the core component expanded sharply to 53.5% from 37.4%.

According to Afrinvest, this structural shift helped dampen headline inflation through most of 2025, even as prices of major food items and household necessities remained elevated. As December 2025 prices are now being compared with the lower rebased baseline of December 2024, the statistical impact is expected to be pronounced.

“Based on our model, which benchmarks December 2025 price dynamics against the rebased CPI baseline of December 2024, we estimate headline inflation to rise sharply to 33.6% year on year from 14.5% in November, driven largely by base effects,” Afrinvest said in a pre-inflation note.

Advertisement

On a month-on-month basis, headline inflation is estimated at 2.4%, up from 1.2% in November, marking the strongest monthly increase since March 2025, when inflation printed at 3.9%.

Food and core components are expected to drive the surge. Afrinvest projects food inflation at 2.7% month on month in December, up from 1.1% in November, while year-on-year food inflation is seen jumping to 31.7% from 11.1%, reflecting base effects and typical year-end demand pressures for staples and frozen foods.

Core inflation is estimated to rise to 1.9% month on month from 1.3% previously, while the year-on-year core measure is projected to climb sharply to 34.5% from 18.0%, also largely driven by base effects.

Despite the December spike, Afrinvest estimates Nigeria’s average headline inflation for 2025 at 22.1%, significantly above the Federal Government’s budget assumption of 15.8%. Analysts, however, expect inflation to moderate in 2026, projecting an average rate of 15.4%, supported by relative exchange-rate stability and further statistical realignment.