The World Bank has projected that Nigeria’s inflation rate will decline to an average of 22.1 percent in 2025, driven largely by the Central Bank of Nigeria’s (CBN) aggressive monetary tightening aimed at stabilising prices and reinforcing market confidence.
This forecast was contained in the latest edition of the Nigeria Development Update (NDU) report titled “Building Momentum for Inclusive Growth”, launched on Monday in Abuja. The biannual report provides critical analysis of Nigeria’s macroeconomic trends, reform progress, and policy priorities necessary for sustainable growth.
According to the World Bank, Nigeria’s persistent inflation—which hit 24.23 percent in March 2025, up from 23.18 percent in February, according to the National Bureau of Statistics—has remained a major challenge. However, the Bank expressed optimism that sustained tight monetary policy would help anchor inflation expectations and gradually bring the rate down.
“Inflation has remained high and sticky but is expected to fall to an annual average of 22.1 per cent in 2025, as a sustained tight stance firmly establishes monetary policy credibility and dampens inflationary expectations,” the report stated.
Key Inflation Drivers
The report identifies multiple structural and policy factors as the root causes of Nigeria’s soaring inflation. These include:
The removal of petrol subsidies, which triggered widespread increases in transportation and commodity prices.
The unification of exchange rates, which led to the devaluation of the naira and rising import costs.
Escalating energy and logistics costs, further pushing up production and retail prices.
Disruptions in food supply chains, due to insecurity, climate variability, and infrastructural deficiencies.
Despite these challenges, the World Bank noted that Nigeria’s macroeconomic position has begun to improve, suggesting a positive outlook if reforms are sustained.
The Nigerian economy grew by 4.6 percent year-on-year in Q4 2024, bringing the full-year growth to 3.4 percent—the strongest performance since 2014, excluding the post-COVID rebound. In addition, Nigeria’s consolidated fiscal deficit narrowed significantly from 5.4 percent of GDP in 2023 to 3.0 percent in 2024.
Total government revenue also surged from N16.8 trillion in 2023 to an estimated N31.9 trillion in 2024, amounting to 11.5 percent of GDP. This improved fiscal outlook has created what the World Bank describes as a “historic opportunity” to restructure public spending and direct more funds toward human capital and infrastructure development.
“Nigeria has made impressive strides to restore macroeconomic stability,” said Taimur Samad, Acting World Bank Country Director for Nigeria.
“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.”
The World Bank stressed that while sectors such as finance and ICT have contributed significantly to GDP growth, they are not labour-intensive and exclude a large portion of the population due to limited access and digital skills.
To achieve inclusive growth and job creation at scale, the report advocates for accelerated productivity in sectors such as agriculture, manufacturing, and construction—where labour demand is high.
“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 private sector-led investment and innovation.”
The report calls on Nigerian policymakers to deepen structural reforms, boost domestic productivity, enhance public-private partnerships, and maintain transparency in public finance.
The NDU reiterates that anchoring inflation and promoting inclusive growth will require sustained policy discipline, consistent reform implementation, and strategic investments in critical sectors. As Nigeria enters the second half of the decade, the current macroeconomic momentum, if maintained, could lay a solid foundation for long-term economic resilience and poverty reduction.
The Central Bank of Nigeria is expected to maintain its hawkish stance in the coming quarters, reinforcing its commitment to price stability as a key macroeconomic objective.