November 20, 2025/CSL Report
Nigeria’s headline inflation eased to 16.1% in October, down from 18.0% in September and slightly below our forecast of 16.3%, marking the seventh consecutive month of deceleration. The slowdown was broad-based, with both food and core inflation moderating. Food inflation fell to 13.1% y/y (from 16.9%), while core inflation eased to 18.7% y/y (from 19.5%).
As in previous months, food and non-alcoholic beverages, restaurants and accommodation services, transport, and utilities remained the key contributors to overall inflation, jointly accounting for 72% of the total price increase. However, on a month-on-month basis, headline inflation edged up by 21bps to 0.9%, representing the first monthly uptick in three months.
The year-on-year decline in food inflation was driven by favourable base effect and lower prices of key staples, including maize, sorghum, sesame, and soybeans. Imported food inflation also fell sharply, dropping 330bps to 9.6% y/y, while month-on-month growth slowed to 0.4% from 3.4%, supported by a 3.8% appreciation of the Naira that eased freight and logistics costs. Despite seasonal pressures from tapering harvests and rising festive demand, we expect food inflation to moderate again next month.
Core inflation continued its downward trend for a fourth consecutive month, helped by currency appreciation and easing cost pressures. Notable components recorded meaningful declines: restaurant and accommodation inflation fell to 17.8% y/y (from 19.3%), health slowed to 28.61% (from 30.23%), and clothing and footwear eased to 15.43% (from 17.06%).
The broader disinflation trend is likely to persist, supported by currency stability and the recent suspension of the 15% fuel import levy, which should ease fuel prices and further constrain core inflation into year-end. However, stronger festive-season demand remains a key upside risk to near-term price pressures.
We expect headline inflation to fall further to around 14.3% y/y in November, driven by favourable base effect, softer food prices, and ongoing currency gains. This backdrop strengthens expectations of a further 100bps policy rate cut by the CBN’s MPC next week, following the 50bps reduction in September. Lower policy rates should push fixed-income yields down, supporting our preference for mid-to-long-dated maturities such as the 2033s and 2035s and likely prompting increased rotation into equities toward year-end.
Click here to download full report: CSL Nigeria Daily – 20 November 2025 – Inflation.pdf
