A report has suggested that the recent slowdown in core inflation is a positive sign for Nigeria, as it supports the possibility of a rate cut.
An investment company in Nigeria, Comercio Partners made this known in a report titled Macro Economic Outlook with theme, Chess vs Checkers – Strategic Depth vs Tactical Simplicity in Nigeria’s Financial Markets.
According to Comercio Partners, the scenario of a rate cut enhances investor confidence and suggests that emerging markets like Nigeria may benefit from a less costly debt market.
It explained that this, however depends largely on the United States (US) having just one rate cut from the Federal Reserve.
“The significant growth in 2023 might be attributed to the previously undocumented population (Illegal Immigrants). With increasing talks on stricter immigration controls at both state and federal levels, these” unaccounted people” effect is unlikely to support the economy’s GDP in 2024,” the report read.
“This suggests that economic growth might be more subdued this year compared to 2023, further strengthening the case for potential rate cuts by the Fed. We forecast that high importation will continue to weigh on US GDP.
“We see the US growing between 1.4% and 1.7% in the second half of the year. We expect the Federal Reserve to shift focus from an intense fight against inflation to achieving its 2-core mandate (price stability and maximum employment) as the economy begins to show weakness.
“Therefore, the FED will adopt a more balanced approach in the second half of the year to ensure the unemployment rate does not reach a worrisome level. Therefore, we expect just one rate cut from the Fed in the second half of 2024.”
On what this means for Nigeria, Comercio Partners said: “The recent slowdown in core inflation is a positive sign, supporting the possibility of a rate cut. This scenario enhances investor confidence and suggests that emerging markets like Nigeria may benefit from a less costly debt market.
“Furthermore, a thriving U.S. economy tends to have a positive trickle-down effect on Nigeria, barring any escalation of geopolitical tensions.”
Nigeria’s inflation rate, meanwhile, fell to 22.22% in June 2025, marking a drop from the 22.97% recorded in May, according to new figures released by the National Bureau of Statistics (NBS) on July 16.
The latest Consumer Price Index (CPI) report indicates a month-on-month decline of 0.75 percentage points and a significant year-on-year decrease of 11.97 percentage points from the 34.19% recorded in June 2024.
The decline comes amid the implementation of a rebased index, with 2024 as the new base year. While this change contributes to the year-on-year moderation, prices continue to rise at a quicker pace on a monthly basis.
Month-on-month inflation increased to 1.68% in June from 1.53% in May, underscoring the persistent pressure on household costs.
Food inflation declined sharply to 21.97% year-on-year in June from 40.87% in the same month of 2024. However, it rose to 3.25% on a month-on-month basis, up from 2.19% in May, driven by higher prices of staples such as tomatoes, pepper, crayfish, plantain flour, and meat.
The average annual food inflation rate for the twelve months ending in June was 28.28%, lower than the 35.3% recorded over the corresponding period last year.
Core inflation, which excludes volatile food and energy prices, also declined year-on-year to 22.76% in June from 27.4% in June 2024.
On a month-on-month basis, however, it increased to 2.46%, compared to 1.10% in May, highlighting renewed pressure in non-food sectors such as housing, utilities, and transportation.
