Prices ease, optimism rises as firms, consumers see brighter 2026

There are fresh signs of cautious optimism in Nigeria’s economy as both consumers and businesses reported improving sentiments in December 2025, driven by moderating prices, better economic outlook and rising confidence in macroeconomic stability, even as concerns linger over high interest rates on bank loans.

This is contained in the Central Bank of Nigeria’s (CBN) latest Consumer Expectations Survey and Business Expectations Survey for December 2025, released yesterday.

According to the CBN, consumers said prices of household goods and food items showed signs of moderation in December, with the Consumer Sentiments Index on price changes improving to -1.4 points, from -2.0 points in November 2025. The apex bank noted that this improvement suggests a prevailing perception that, although prices remain high, the pace of increase is slowing.

Overall consumer confidence also strengthened, as the Overall Consumer Sentiment Index rose sharply to 4.8 points in December from 1.9 points in November, marking the second consecutive month of optimism among respondents since May 2024.

Further reinforcing this positive shift, the Economic Condition Index increased to 9.7 points, from 6.3 points in November, indicating growing optimism about the broader economy. Similarly, households reported an improvement in their financial situation, with the Family Financial Situation Index rising to -5.4 points from -10.3 points, reflecting reduced pessimism about household finances.

Family income expectations also improved, as the Family Income Sentiment Index climbed to 10.2 points, compared with 9.8 points in the preceding month.

Despite the improving mood, consumers remain wary of borrowing costs. The CBN disclosed that 36 per cent of respondents observed a rise in interest rates on bank loans over the past three months.

However, fewer respondents – 30.9 per cent – expect interest rates to rise further in the next three months, suggesting expectations of relative stability ahead.

On prices, consumers still perceive the average prices of selected items as relatively high, with the Consumer Sentiments Index for average prices at 25.9 points in December. Interestingly, prices of food and other household items were viewed as low, with an index of -25.3 points, underscoring mixed price dynamics across consumption categories.

Looking ahead, consumers expect a slight increase in average prices over the next six months, pointing to expectations of gradual market adjustments rather than sharp price spikes.

On the business side, optimism about the macroeconomy strengthened further, with firms’ Confidence Index rising to 37.5 points in December 2025. According to the CBN, this optimism is expected to deepen, peaking at 52.5 points over the next six months.

“All sectors expressed optimism on the business outlook of the macroeconomy in the current month,” the CBN said, with the industrial sector leading at 38.7 points. While services sector optimism is expected to slow slightly in the near term, confidence is projected to rise again over the next three and six months. Industry and agriculture are expected to maintain sustained positive outlooks across all reviewed periods.

Firms also expect improvements in key macroeconomic indicators. Survey respondents anticipate a steady appreciation of the naira against the dollar, as reflected by positive exchange rate indices across the review periods. They also foresee a continued positive outlook for borrowing rates, despite prevailing tight financial conditions.

Inflation expectations further eased in December, as the Inflation Expectations Index fell to 41.7 points, from 43.5 points in November, indicating improved sentiment about price pressures. This improvement was driven by both businesses and households.

Among businesses, micro enterprises reported the highest perception of high inflation at 52.8 per cent, while medium-sized firms recorded the lowest at 45.5 per cent. For households, urban respondents perceived inflation as higher (52.9 per cent) than rural respondents (51.6 per cent). Income analysis showed that households earning between N30,001 and N100,000 monthly had the highest proportion of respondents who viewed inflation as high.

Energy, transportation, exchange rate movements, insecurity and interest rates were identified as the top five drivers of inflation perceptions in December 2025.

Notably, confidence in the apex bank’s communication remained strong, with 93.4 per cent of respondents affirming that the CBN was transparent in its inflation communication during the review period.

Culled from vanguard