Standard Chartered’s Razia Khan notes that Nigeria’s January CPI surprised to the downside, with headline inflation at 15.1% year-on-year after a 2.88% monthly fall. Incorporating rebased data, the bank now forecasts average CPI of 12.0% in 2026, rising to 13.8% in 2027 and 13.3% in 2028. Despite scope for Central Bank of Nigeria easing, still-high core and 12‑month headline inflation argue for a measured approach.

Disinflation opens room for measured CBN cuts

"Nigeria’s January inflation release surprised once again to the downside, with a significant 2.88% m/m fall keeping headline inflation contained at 15.1% y/y."

"We amend our CPI inflation forecasts in line with the revised data: we now see CPI averaging 12.0% y/y in 2026 (16.0% prior). We see inflation rising again to 13.8% in 2027 (13.6%) and to 13.3% in 2028 (12.7% prior). While this should clear the way for more Central Bank of Nigeria (CBN) policy easing from February – we still see room for 900bps of easing over the next two years – we nonetheless think that the pace of easing will need to be measured."

"The CBN has set itself transitional inflation targets of 16.5% +/-2ppt in 2026, and 13.0% +/- 2ppt in 2027."

"While this appears easy enough to meet on the current trajectory, fiscal risks ahead of 2027 elections, rising food prices with any surge in insecurity, and downside risks to oil revenue could all pose challenges."

"Core inflation remains elevated for now, and Nigeria’s brief history of low inflation and FX stability may mean that inflation expectations are difficult to anchor."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)