United Capital Forecasts Nigeria’s Inflation to Fall to 20.8% in August

Share on Facebook Share on LinkedIn

United Capital Research (UCR) has predicted that Nigeria’s headline inflation rate will drop to 20.83 per cent in August 2025, down from 21.88 per cent in July 2025.

The pan-African financial services institution said its forecast is based on a combination of factors, including decreasing prices of major food items, relatively stable energy prices, especially Premium Motor Spirit (PMS), also known as petrol, and exchange rate stability (Naira against the U.S. Dollar).

On food prices, the firm cited data released by the National Bureau of Statistics (NBS), which showed that the average prices of most food items, including maize, beans, garri, rice, soybeans and sorghum, dropped in August 2025 compared with July, except for yam.

It noted that crude oil and PMS prices remained stable. While the average price of Bonny Light crude oil fell to $70.55 per barrel in August 2025 from $73.17 in July, petrol pump prices fluctuated during the month between ₦915 and ₦865 per litre.

“However, these price swings had a limited impact on inflation-driving sectors such as transportation, hospitality, and food,” the analyst stated.

READ ALSO: Nigerian Banks’ 2025 Profit to Drop by 19% – Agusto

UCR stated that exchange rate stability supported price relief. It noted that despite the naira recording a marginal 0.27 depreciation in August (₦1,534.88/$1 in August against ₦1,530.67/$1 in July), the pass-through effects on consumer prices, however, remained muted, as producers largely absorbed the cost increases.

United Capital stated that if its 20.83 per cent forecast falls through, it would mark the fifth consecutive month of disinflation, beginning in April 2025.

It, however, stated that at 20.83 per cent, inflation remains elevated and continues to erode purchasing power and constrain economic growth. It emphasised that sustained efforts to improve security and boost agricultural output are critical to achieving a lower inflation rate that supports economic growth in Nigeria.

Macroeconomic outlook and CBN’s MPC stance

Nigeria’s inflation had hit a 28-year high of 34 per cent in 2024 but has continued to decline, easing to 21.88 per cent as of July 2025 following monetary policy reforms embarked on by the Central Bank of Nigeria (CBN) and the rebasing of the CPI done earlier in the year, which changed the base year.

In its quest to tackle inflationary pressure, the CBN has hiked the monetary policy rate (MPR) by 875 basis points in the last year to 27.5 per cent. The apex has maintained the benchmark interest rate at that level for four consecutive times to squeeze liquidity in the financial system.

While maintaining a positive outlook on Nigeria’s macroeconomic stability, the United Capital said it expects the Monetary Policy Committee (MPC) of the CBN to consider easing its tight monetary policy stance during the next MPC meeting, given the current inflation trend.

Post Views: 8