The International Monetary Fund (IMF) has projected that Nigeria’s headline inflation will surge to 37% in 2026, following the rebasing of the nation’s Consumer Price Index (CPI) by the National Bureau of Statistics in January 2025. This forecast, part of the IMF’s April 2025 World Economic Outlook, suggests that persistent price pressures and structural constraints will likely keep inflation elevated. Although inflation moderated to 33.2% in 2024, it is expected to slightly decrease to 26.5% in 2025 before rising again to 37% in 2026.
However, the IMF’s inflation projection has sparked mixed reactions among Nigerian economists. Some believe the forecast is overly pessimistic, arguing that it does not reflect domestic policy realities or the recent stabilization of inflation, which has hovered around 23-24% since the CPI rebase. Economists also suggest that addressing supply-side constraints, supporting the real sector, and stabilizing exchange rates could help moderate inflation.
In addition to inflation concerns, the IMF downgraded Nigeria’s economic growth forecast for 2025, adjusting it to 3% from 3.2%. The report highlighted the impact of declining global oil prices, which are expected to negatively affect Nigeria’s fiscal balance, growth prospects, and investor sentiment. The IMF also warned that Nigeria remains highly vulnerable to external shocks, particularly commodity price fluctuations that influence government revenue and trade balances.
The IMF further noted that Nigeria’s current account surplus, while impressive in 2024, is expected to shrink in the coming years. A range of economists, however, has expressed hope that strategic policy adjustments—such as improved oil output, fiscal discipline, and enhanced security—could help mitigate these challenges and prevent a severe economic downturn. Despite concerns, the government is urged to remain cautious with its fiscal policies to avoid exacerbating inflationary pressures.
Source: Punch