This week, Nigeria’s economic narrative will be shaped by a crucial set of data: June’s Consumer Price Index (CPI) report, widely expected to show inflation cooling to 21.4% year-on-year.

While such a figure would mark the fourth consecutive monthly decline and offer some relief to the Central Bank of Nigeria (CBN), it comes against the backdrop of persistent challenges—including weaker-than-budgeted oil production and prices, and the fragile stability of the Naira.

Meanwhile, the international environment remains fraught with risks, as global investors brace for potentially market-shaking events: US inflation data, the unofficial start of corporate earnings season, and fresh geopolitical tensions after former US President Donald Trump threatened 35% tariffs on the EU and Mexico.

Against this turbulent backdrop, Lukman Otunuga, Senior Market Analyst at FXTM, said, “Nigeria is striving to manage a careful balancing act between taming inflation, defending the currency, and supporting growth in an economy heavily dependent on oil revenues”.

He added that international markets will be driven this week by top-tier data releases that could set the tone for risk sentiment worldwide. 

“The US Consumer Price Index report is forecast to show headline inflation ticking up to 2.6 per cent in June from 2.4 per cent the previous month, with core CPI rising to 2.9 per cent from 2.8 per cent.

“A stronger-than-expected print may undermine hopes for interest rate cuts from the Federal Reserve in the second half of 2025, lifting the dollar and tightening global financial conditions. Such moves would pressure emerging-market currencies like the Naira and complicate the task of domestic inflation management”.

Meanwhile, geopolitical tensions re-emerged over the weekend after Trump threatened new tariffs on major US trading partners if re-elected. Such threats stoke fears of a new wave of protectionism that could disrupt global trade and weigh on commodity demand.

These external risks mean Nigeria’s economy is navigating not only domestic challenges but also an increasingly uncertain global landscape.

Closer to home, attention is squarely on June’s CPI reading. Analysts expect inflation to slow to 21.4 per cent year-on-year from 23 per cent in May, continuing a trend of easing price pressures that began earlier this year.

This sustained moderation would mark the fourth straight month of deceleration, offering cautious optimism that the CBN’s series of aggressive interest rate hikes throughout 2024 is having an effect.

“The central bank’s benchmark rate currently stands at 27.5 per cent—one of the highest in Africa—after policymakers prioritized price stability over growth in the face of surging food costs, imported inflation, and Naira depreciation.

“Part of the easing inflation picture is technical. Base effects from last year’s spikes are falling out of the calculation. But there is also genuine progress: the Naira has stabilized and even gained ground modestly in recent months thanks to tighter monetary policy, higher non-oil export earnings, and a softer US dollar”, Otunuga said.

If June’s data confirms this cooling trend, many analysts expect the CBN to hold rates steady at its next meeting later this month, offering a pause to assess the impact of previous tightening without undermining the fragile gains in currency stability.

The Naira’s recent stabilization has been a critical factor in slowing imported inflation, providing relief to businesses and households battered by last year’s sharp currency devaluation.

Following the government’s reforms to unify and liberalize the exchange rate, the currency suffered a severe initial decline before finding a more stable level. The CBN’s commitment to a willing-buyer, willing-seller FX market, stricter oversight of BDCs, and efforts to improve transparency have helped restore some confidence.

Yet these gains remain vulnerable. External reserves remain pressured by high import bills and limited portfolio inflows. Despite recent improvement in non-oil export earnings, oil sales still generate the bulk of Nigeria’s foreign exchange—a dependence that exposes the Naira to swings in global energy markets and investor sentiment.

Any renewed dollar strength or oil-price volatility could quickly test the sustainability of the Naira’s recent stability.

Nigeria’s fiscal outlook is also complicated by oil production and pricing challenges.

The 2025 federal budget is built on assumptions of producing 2 million barrels per day at an average Brent price of $75 per barrel. In reality, production stood at just 1.544 million b/d in May, according to OPEC data. Brent crude is hovering around $70—a significant gap from budget expectations.

Makanjuola  Emmanuel, an analyst said, “Such shortfalls pose real risks for government revenue. Oil remains the country’s primary foreign-exchange earner and a dominant contributor to the budget. Lower prices and weaker output mean less money for infrastructure, social spending, and debt service.

“While Nigeria hopes to raise production to 1.9 million b/d by the end of 2025, the path is uncertain. Obstacles include pipeline vandalism, oil theft, security challenges in the Niger Delta, and years of underinvestment in production capacity”.

Even if production improves, weak global demand and fears of oversupply could keep prices below budget assumptions. Brent has recovered around 4 per cent this month but remains over 6 per cent lower than at the start of 2025.

These intertwined challenges mean the Nigerian government and central bank face tough choices.

“If inflation continues to cool to the forecast 21.4 per cent in June and the Naira holds steady, the CBN may pause its tightening cycle and focus on anchoring expectations. But any renewed pressure on the currency or a re-acceleration of prices could force the central bank to act again—even at the cost of slowing growth.

“On the fiscal side, lower oil revenues may require difficult decisions: cutting spending, borrowing more at higher costs, or accelerating efforts to expand non-oil tax revenues. The government’s reform push, including plans to improve revenue collection and boost non-oil exports, remains critical to reducing dependence on oil over the long term”.

As markets await Nigeria’s June inflation data, investors, businesses, and households will look for signs that price pressures are sustainably easing.

At the same time, the CBN will be weighing how to maintain hard-won currency stability, while the federal government must grapple with the budgetary consequences of lower oil prices and output.

With global markets on edge over US inflation data, trade tensions, and shifting interest-rate expectations, Nigeria’s economic policymakers are walking a tightrope—managing local pressures while navigating an uncertain international environment.

“The coming days will offer a critical window into whether Africa’s largest economy is turning the corner on its inflation fight and how resilient it will be in the face of fresh global headwinds”, Otunuga stressed.