The International Monetary Fund (IMF) has projected that Nigeria’s headline inflation will average 26.5% in 2025, even after a recent rebasing of the Consumer Price Index (CPI) by the National Bureau of Statistics (NBS). This marks a decline from the estimated 33.2% in 2024, but the IMF expects inflation to rise again to 37.0% by 2026, suggesting that price stability will remain elusive in the near term.
These projections are contained in the IMF’s April 2025 World Economic Outlook (WEO), which reflects concerns over Nigeria’s macroeconomic outlook amid external shocks and ongoing structural adjustments.
Inflation Moderation Short-Lived
Despite temporary relief from soaring inflation, Nigeria still grapples with cost-of-living pressures. The rebasing of the CPI to reflect 2024 household spending patterns led to lower official inflation figures:
- January 2025: 24.48% (from 34.80% in December 2024)
- February 2025: 23.18%
- March 2025: 24.23%
Food inflation remains stubbornly high, and the CBN's monetary policy rate at 27.5% signals a tight approach to curbing inflation.
External Balances Under Threat
Nigeria’s current account surplus—which stood at 9.1% of GDP in 2024—is forecast to decline to 6.9% in 2025 and 5.2% in 2026. This follows a $6.83 billion Balance of Payments surplus in 2024, driven largely by a robust trade surplus.
However, risks loom. JP Morgan warns that oil prices falling below Nigeria’s fiscal breakeven of $60/barrel could plunge the account into deficit. In contrast, Fitch Ratings maintains a more optimistic view, expecting a moderate average surplus of 3.3% of GDP over 2025–2026, aided by refinery activity and energy sector reforms.
Slower Growth and Stagnant Incomes
The IMF has downgraded Nigeria’s GDP growth to 3.0% in 2025 and 2.7% in 2026, from 3.4% in 2024, citing weak oil revenues. Even more concerning is Nigeria’s real per capita output, which is expected to rise by just:
- 0.6% in 2025
- 0.3% in 2026
This minimal income growth suggests rising inequality and weak household purchasing power, keeping the average Nigerian under financial strain.
Structural Reforms in Focus
While acknowledging Nigeria’s bold economic reforms—including the removal of fuel subsidies, end of CBN deficit financing, and exchange rate unification—the IMF stresses the need for broader and deeper reforms to:
- Improve structural efficiencies
- Strengthen productivity
- Achieve sustainable price stability
As Africa’s largest economy navigates economic headwinds and transition policies, the challenge remains not just growth—but inclusive growth that translates into improved living standards for its citizens.