How 14.45% Inflation Will Affect Stocks and Bonds

Nigeria’s inflation rate slowed to 14.45% in November 2025, down from 16.05% in October, marking the eighth straight month of disinflation, according to the National Bureau of Statistics. 

This easing has important effects for investors in both stocks and fixed-income securities.

The impact of inflation on fixed income

Lower inflation makes government bonds and Treasury Bills more attractive. Recently, Nigerian Treasury Bills yielded 17.2–17.3%, giving investors a positive real return of about 2.7–2.9%. 

This is a major improvement compared to previous periods when inflation outpaced returns, leaving investors with negative real yields.

High demand for government securities is supported by banks and Pension Fund Administrators, who hold large portions of their assets in fixed-income instruments. Structural liquidity and expectations that inflation will continue to ease make investors more willing to lock in these yields.

The impact on stocks

For equities, lower inflation changes the risk-reward balance. With high-yield government securities available, investors no longer need to hold stocks just to protect against inflation.

This raises the performance benchmark for equities and favors companies with strong cash flows, sustainable dividends, and solid balance sheets.

Banks and insurance companies are positioned to benefit. Their investments in government securities earn higher yields, boosting earnings. 

At the same time, easing inflation helps stabilize asset quality and underwriting conditions, supporting profitability. Speculative stocks with weak earnings may face downward pressure as investors shift toward safer, higher-yielding options.

What to note

The decline in inflation to 14.45% signals a more balanced investment environment. Fixed-income securities become more appealing, while equities must compete with higher risk-free returns. 

Investors will need to be selective, focusing on companies with stable earnings and dividend potential, rather than chasing broad market gains.