By Erewunmi Peace

The Independent Media and Policy Initiative (IMPI) has attributed Nigeria’s declining inflation rate to the steady expansion of the country’s Purchasing Managers’ Index (PMI), insisting that inflation could drop to 14% by the end of 2025 if current economic trends continue.

In its latest economic review, IMPI noted that Nigeria’s PMI—an indicator of business confidence and production activity—has remained in the expansion zone for 11 consecutive months, signaling sustained improvement in the manufacturing and services sectors.

According to the policy group, the rise in PMI is helping to ease cost pressures and stabilize consumer prices across key sectors of the economy.

PMI at 55.4, Inflation Drops to 16.05%

IMPI’s analysis shows that the PMI stood at 55.4 points in October 2025, reflecting increased production levels, stronger new orders, and improved supplier delivery times. Over the same period, Nigeria’s inflation rate fell to 16.05%, marking one of the sharpest annual declines recorded in recent years.

In its statement, IMPI explained that its predictive regression model—using Ordinary Least Squares (OLS) estimation—demonstrated an inverse relationship between PMI and inflation. This means that as business activity improves, inflationary pressures tend to ease.

Economic Reforms Strengthening Momentum

The report credits part of the positive trend to ongoing government reforms aimed at stabilizing the economy, boosting investor confidence, and supporting domestic production.

According to IMPI, Nigeria is benefiting from a combination of:

Increased private-sector activity

Improved supply chain conditions

Tighter monetary and fiscal coordination

Gradual recovery in consumer demand

Despite persistent challenges in energy costs, exchange-rate fluctuations, and food supply, IMPI maintains that Nigeria is on track to achieve its year-end inflation projection of 14%, provided the PMI remains strong and policy coordination continues.

The group also urged policymakers to further support local production and ensure that reforms are sustained to avoid reversing the gains recorded so far.

With Nigeria’s business climate gradually improving, IMPI believes the economy is entering a more stable growth phase. Analysts say that if inflation continues to fall, it may open up room for lower interest rates, cheaper borrowing, and improved competitiveness for Nigerian businesses.