Corporate Gain: Lower Inflation Fuels Dual Tailwind of Spending and Cost Reduction

Nigeria’s easing inflation should offer relief to battered consumers as well as reduce firms input costs helping to boost corporate margins and sales in the medium term.

“We believe this decline in inflation will enhance consumer purchasing power and allow businesses to benefit from lower production costs, particularly those reliant on imported inputs,” said Meristem Securities analysts in an Oct.17 notes to clients.

Nigeria’s headline inflation eased for the sixth consecutive month to 18.02% year-on-year (YoY) in September 2025, compared to 20.12% in August 20250.

The continued disinflation was largely driven by broad-based declines across food and core components.

Meristem analysts expect food inflation to ease further in the near term, supported by the ongoing harvest season and government food security interventions.

Core inflation (excluding food and energy) declined to 1.42% Month-on-Month largely due to the appreciation of the Naira, which averaged N1,492.65/USD (vs. N1,532.48/USD in August) the strongest level so far in 2025, helping to reduce import related cost pressures.

Also, food prices deflated for the first time since February 2012, as a result of the strong impact of the ongoing harvest season on market supply

Overall, headline inflation is projected to maintain its downward trajectory in the short term, underpinned by ongoing disinflationary forces.

Lower inflation is coming hand in hand with higher growth projections for the Nigerian economy, which is bullish for stocks.

The International Monetary Fund (IMF) raised Nigeria’s 2025 GDP growth forecast to 3.90% (vs. 3.40% previously) citing improving investor sentiment, higher oil output, and supportive fiscal policies.

Nigeria’s 2026 growth outlook was also upgraded to 4.20%, reflecting sustained economic momentum.

The upward revision points towards Nigeria’s resilience, driven by higher crude production averaging 1.46mbpd in Jan–Sept 2025 (vs. 1.32mbpd in the same period last year), ongoing energy and financial sector reforms, and increased FX market transparency following recent adjustments.

The IMF also highlighted that the recent GDP rebasing which now captures sectors such as the digital economy and informal agriculture has boosted Nigeria’s nominal GDP by over 40%, improving overall economic visibility.

This could signal rising investor confidence, with potential upside for capital inflows, corporate earnings, and consumer spending, according to the Meristem analysts.

“If the current reform trajectory continues, we expect growth to accelerate further, supported by improved oil revenues, private sector participation, and productivity gains across both formal and informal sectors,” the analysts at Meristem said.

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