Nigeria’s inflation rate is projected to average 22.1% in 2025 as the Central Bank’s tight monetary stance begins to anchor inflation expectations and restore confidence in macroeconomic management.
This was disclosed in a statement published Monday on the World Bank’s website, following the formal launch of the latest Nigeria Development Update (NDU) report in Abuja.
The biannual report, titled “Building Momentum for Inclusive Growth,” assesses recent economic trends and policy responses in Nigeria, with a focus on how to consolidate stability and stimulate inclusive growth.
According to the World Bank, while Nigeria’s economic indicators are showing signs of improvement, particularly growth, revenue, and fiscal balance, price pressures remain elevated.
“The report further adds that Inflation has remained high and sticky but is expected to fall to an annual average of 22.1% in 2025, as a sustained tight stance firmly establishes monetary policy credibility and dampens inflationary expectations,” the statement read.
Nigeria’s inflation has been driven by the removal of fuel subsidies, exchange rate unification, high logistics and energy costs, and food supply disruptions.
However, the report noted that recent monetary tightening by the Central Bank of Nigeria (CBN) is beginning to slow inflation momentum.
Economy strengthens, but risks remain
The NDU noted that Nigeria’s economy grew by 4.6% year-on-year in Q4 2024, pushing full-year growth to 3.4%, the strongest non-COVID performance since 2014.
The country’s fiscal deficit narrowed significantly from 5.4% of GDP in 2023 to 3.0% in 2024, supported by a surge in consolidated government revenues from N16.8 trillion (7.2% of GDP) in 2023 to an estimated N31.9 trillion (11.5% of GDP) in 2024.
The World Bank said the improving macroeconomic outlook now presents Nigeria with a “historic opportunity” to reposition public spending and deliver meaningful development outcomes.
“Nigeria has made impressive strides to restore macroeconomic stability. With the improvement in the fiscal situation, Nigeria now has a historic opportunity to improve the quantity and quality of development spending; investing more in human capital, social protection, and infrastructure,” said Taimur Samad, Acting World Bank Country Director for Nigeria.
He added that public resource allocation must shift away from previous unsustainable patterns and instead address the country’s significant development gaps.
Inclusive growth still a priority
Despite growth in sectors such as finance and ICT, the report stressed that these industries do not generate jobs at the scale needed to reduce poverty. Many Nigerians lack access or the skills to participate in these growth areas.
The NDU recommended a private sector-led growth strategy that focuses on improving infrastructure, increasing access to finance, enhancing competition, and undertaking reforms in productive sectors to support job creation and inclusive development.
“International experience suggests that the public sector cannot sustainably generate growth and jobs by itself. Nigeria is no exception,” said Alex Sienaert, World Bank Lead Economist for Nigeria.
“A useful strategy is to position the public sector to play a dual role as a provider of essential public services… and as an enabler for the private sector to invest, innovate, and grow the economy,” he added.
The NDU is one of the World Bank’s flagship reports on Nigeria and provides regular assessments of the economic landscape, policy progress, and risks to inclusive and sustainable growth.
