Report pegs post-rebasing inflation at 17.5 per cent

• Says policy coordination will sustain naira rally
Comercio Partners has put Nigeria’s rebased inflation rate at between 15 and 20 per cent in its base-case projection. This puts the mid-point estimate at 17.5 per cent.

With no strong catalysts in sight, the inflation rate is expected to drop to between 20 and 25 per cent.

The investment bank’s most optimist position is between 10 and 15 per cent, a significant divergence from its current 35 per cent.

The bank, in its 2025 Macroeconomic Outlook, said the planned reduced weight of the food basket, the lead driver of the inflation growth in the past few years, reinforces its belt on significant drop divergence from the 2023 to 2025 spike.

Inflation trend, exchange rate stabilisation and fiscal expansion, the report said, would define the country’s macroeconomic in the year. Other trends to watch, it added, are policy adjustments, expansion in local refining capacity, recalibrated gross domestic product (GDP) and improved external reserves.

The expansion of local refining, according to the report, will significantly reduce the influence of exchange rate movement on the prices of energy even as the volatility is expected to decline substantially.

“The stabilisation, coupled with more predictable exchange rates, will likely lead to lower production and transportation costs, generating a positive ripple effect throughout the broader economy,” it insists.

Last year, the country sustained its positive balance of payment position with many analysts expecting the trend to continue especially with improved local crude refining.

Comercio also believes the positive balance of payment will continue and possibly be strengthened on the grounds of a “strategic shift to self-sufficiency” in petroleum products – a major item on the import basket.

It also hinged the improved refining of its firm position on a stronger naira this year. The introduction of the Diaspora Account for Non-resident Nigerians by the Central Bank of Nigeria (CBN), it noted, will accentuate a more stable FX market.

Stable policies and a decline in interest rates, it posited, would increase activities in the corporate investment segment. It also expects the probable reduction in loan demand to make funding more accessible for companies for business expansion.

“This anticipated wave of corporate investment will mark a departure from constraints of 2024, a year in which surging interest rates severally limited business access to credit and stifled expansion plans,” the report recalled.

Despite its optimism, Comercio sees the naira closing at between N1700 and N1800 per dollar in the first half of the year. However, it noted, a coordinated efforts by the monetary and fiscal authorities may sustain the current naira appreciation and bolster the broader resilience of the economy.