Market News

by Taofik Salako, Deputy Business Editor

The average volume of goods and services for a unit of naira continued to improve as efficient food supply and relative stability in the foreign exchange (forex) market further deflated inflationary pressure.

Ahead of the release of the Consumer Price Index (CPI) Report today by the National Bureau of Statistics (NBS), independent consumer surveys and econometric models surveyed yesterday were unanimous that inflation rate dropped for the seventh consecutive time.

Consumer surveys and economic intelligence reports surveyed by The Nation showed that headline inflation rate dropped by more than 100 basis points to around 16.35 per cent in October, as against 18.02 per cent recorded in September.

Nigeria has seen steady disinflation since April 2025, with a combination of improved harvest, stable forex, improving security and stable logistics driving down costs of goods and services.

The continuing decline in inflationary pressure also raised prospects of further cut in benchmark interest rate by the Central Bank of Nigeria (CBN). The Monetary Policy Committee (MPC) of the apex bank had in September signaled a reflective monetary easing, cutting the Monetary Policy Rate (MPR) by 50 basis points from 27.50 per cent to 27.00 per cent. It was the first rate cut in five years, since September 2020.

Powered by VidCrunch

The naira appreciated by 0.5 per cent to close weekend at N1,435.00 per dollar. Nigeria’s gross forex reserves increased for the 17th consecutive week, rising by $187.11 million to close weekend at $43.54 billion.

“We maintain a positive outlook on the naira, supported by expectations of sustained forex) liquidity. On the domestic front, rising non-oil exports and improving market confidence should underpin inflows, while externally, healthy forex reserves, a positive current account position, and a firmer global monetary easing are expected to reinforce foreign investor sentiment and stimulate additional forex market inflows,” Cordros Capital Group stated..

Coronation Group predicted that headline inflation rate could fall to 16.29 per cent in October, citing bumper harvest from current harvest season.   

Analysts at SCM Capital said disinflation trend reflected gains from economic reforms, foreign exchange (forex) rate stability and seasonal food supply dynamics.

“Inflation is projected to decline further in October 2025, supported by sustained forex stability, moderating input costs, and improved domestic supply conditions. The harvest season should further ease food prices, extending the disinflation trend.

“With inflation easing for six consecutive months, the Central Bank of Nigeria (CBN)’s Monetary Policy Committee (MPC) may consider another rate cut to stimulate growth. Overall, price pressures are expected to remain subdued, sustaining the economy’s momentum”, SCM Capital stated.

Analysts at CardinalStone noted that the “moderating inflation bodes well for Nigeria’s currency valuation”.

According to analysts, the ongoing disinflationary trends bode well for currency valuation with the combination of a sustained current account surplus and a steady build-up in forex reserves expected to underpin further naira appreciation.

CardinalStone projected that naira would close the year within the range of N1,400 and N1,450 per dollar.

“The softer inflation outlook reinforces the case for additional monetary easing by the CBN at its November policy meeting. We expect a 100 basis points reduction in Monetary Policy Rate (MPR) to 26.0 per cent.

“Lower inflation and an expected policy rate cut are likely to drive further yield compression across the naira credit market. While the curve may remain inverted, we expect a sharper adjustment at the short end of the curve.”