The International Monetary Fund (IMF) has projected that Nigeria’s headline inflation will average 26.5% in 2025 and is likely to rise to 37.0% in 2026, despite recent efforts by authorities to rebase inflation data.
These projections, contained in the IMF’s April 2025 World Economic Outlook (WEO), suggest a cautious outlook for Nigeria’s macroeconomic environment amid ongoing reforms and global economic uncertainties. While inflation is expected to ease slightly from 33.2% in 2024, the Fund warned that price stability remains fragile.
External Account Under Pressure as Oil Prices Loom Large
In terms of Nigeria’s external sector, the IMF anticipates the nation’s current account surplus will narrow from 9.1% of GDP in 2024 to 6.9% in 2025, and eventually fall to 5.2% in 2026.
Data from the Central Bank of Nigeria (CBN) indicates that the country posted a Balance of Payments surplus of $6.83 billion in 2024, the first in three years. This was buoyed by a current and capital account surplus of $17.22 billion, driven by a positive trade balance of $13.17 billion.
However, analysts have raised concerns about the durability of this surplus. JP Morgan has cautioned that sustained oil prices below Nigeria’s fiscal breakeven point of $60 per barrel could reverse the surplus into a deficit. On the other hand, Fitch Ratings projects a modest surplus of around 3.3% of GDP between 2025 and 2026, citing upcoming refinery operations and energy policy reforms as key factors.
GDP Growth Weakens, Per Capita Income Stagnant
The IMF has also revised its growth outlook for Nigeria downward, forecasting a GDP expansion of 3.0% in 2025 and 2.7% in 2026 — lower than the 3.4% recorded in 2024. The downward revisions are attributed to anticipated declines in oil revenue.
Real GDP per capita is expected to increase marginally by 0.6% in 2025 and 0.3% in 2026, reflecting minimal progress in living standards and continuing disparity between growth and income distribution. This remains below the Sub-Saharan Africa regional average, highlighting persistent inequality and limited consumer purchasing power.
Context Behind Inflation Trends
In January 2025, the National Bureau of Statistics (NBS) changed the base year for the Consumer Price Index (CPI) from 2009 to 2024, aligning it with current consumption patterns. This rebasing led to a recalibration of inflation data, with January’s figure dropping to 24.48% from 34.80% in December 2024.
Inflation continued to ease in February to 23.18%, before slightly increasing to 24.23% in March, reflecting lingering cost-of-living challenges. Food inflation, a major driver, declined modestly but remains elevated.
The CBN has maintained its Monetary Policy Rate (MPR) at 27.5%, reflecting a cautious stance amid inflationary threats. The IMF acknowledged the bold reforms implemented so far — including subsidy removal, ending CBN deficit financing, and exchange rate unification — but emphasized the need for deeper structural reforms to foster productivity and long-term disinflation.
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