The International Monetary Fund (IMF) has projected that Nigeria’s headline inflation will average 26.5% in 2025, following a recent rebasing of the Consumer Price Index (CPI) by the National Bureau of Statistics (NBS).
The inflation rate, although down from 33.2% in 2024, is expected to spike again to 37.0% in 2026.
This forecast is contained in the IMF’s April 2025 World Economic Outlook (WEO), which paints a cautious picture of Nigeria’s macroeconomic prospects amid reform-driven adjustments and external volatility. Despite a temporary slowdown in inflation, the Fund warns that price stability remains elusive.
Current account surplus faces oil price headwinds
While inflation shows signs of short-term moderation, Nigeria’s external position is under pressure. The IMF projects the current account surplus to narrow from 9.1% of GDP in 2024 to 6.9% in 2025, and further to 5.2% in 2026.
CBN data shows Nigeria recorded a Balance of Payments surplus of $6.83 billion in 2024, its first in three years. This was driven by a $17.22 billion surplus in the current and capital account, supported by a goods trade surplus of $13.17 billion.
However, the sustainability of this surplus is in question.
JP Morgan has warned that prolonged oil prices below Nigeria’s fiscal breakeven of $60 per barrel could reverse the current account into a deficit. In contrast, Fitch Ratings expects a moderate surplus averaging 3.3% of GDP over 2025–2026, supported by refinery projects and energy reforms.
Growth slows, income per capita stagnant
The IMF also revised Nigeria’s GDP growth forecast downward to 3.0% in 2025 and 2.7% in 2026, from 3.4% in 2024. The 2025 and 2026 forecasts were revised lower by 0.2 and 0.3 percentage points, respectively, due to lower expected oil receipts.
Meanwhile, Nigeria’s real per capita output is projected to rise by just 0.6% in 2025 and 0.3% in 2026, indicating minimal gains in individual income levels despite overall growth. This lags behind the Sub-Saharan Africa average and underscores continued inequality and weak household purchasing power.
What you should know
In January 2025, the NBS updated the CPI base year from 2009 to 2024 to reflect more current household spending patterns.
- As a result, inflation figures were recalibrated, with the January rate easing to 24.48% from 34.80% in December 2024.
- The moderation continued in February, falling to 23.18%, before inching back up to 24.23% in March, indicating persistent cost-of-living pressures.
- Food inflation—a major contributor—declined marginally in February but remains elevated. The Central Bank of Nigeria (CBN) has held its Monetary Policy Rate at 27.5%, signalling a cautious but firm stance in the face of inflationary risks.
- In its recent statement, the IMF acknowledged Nigeria’s bold policy steps, including the removal of fuel subsidies, cessation of central bank deficit financing, and unification of exchange rates.
However, it emphasised the need for broader reforms to address structural inefficiencies, boost productivity, and reduce inflation over the long term.
