World Bank Projects Nigeria’s Inflation to Drop to 22.1%

The World Bank has forecasted that Nigeria’s inflation rate will decline to an average of 22.1% in 2025, crediting the Central Bank of Nigeria’s (CBN) firm monetary policy measures aimed at stabilizing prices and curbing inflation expectations.

This projection was shared in a statement released on Monday on the World Bank’s website, coinciding with the unveiling of its latest Nigeria Development Update (NDU) report in Abuja.

Titled “Building Momentum for Inclusive Growth,” the biannual report analyzes recent economic developments, evaluates ongoing policy responses, and outlines strategies to sustain reform efforts and promote inclusive economic progress.

Despite progress in key macroeconomic indicators such as GDP growth, revenue generation, and fiscal consolidation, the report highlights that headline inflation remains a persistent challenge.

“The report notes that although inflation has been high and sticky, it is expected to average 22.1% in 2025 as tight monetary policies continue to strengthen policy credibility and reduce inflation expectations,” the World Bank stated.

The report identified several contributing factors to inflation in recent years, including the removal of fuel subsidies, exchange rate harmonization, rising logistics and energy costs, and recurring disruptions in food supply chains.

Nevertheless, the CBN’s ongoing monetary tightening is beginning to bear fruit, with inflationary pressures anticipated to ease in the coming year.

On a broader scale, Nigeria’s macroeconomic position continues to strengthen. The economy grew by 4.6% year-on-year in Q4 2024, leading to an overall GDP growth of 3.4% for the year—the highest since 2014, excluding the post-COVID rebound.

Fiscal indicators also showed significant improvement. The consolidated fiscal deficit dropped from 5.4% of GDP in 2023 to 3.0% in 2024, while government revenues nearly doubled, rising from N16.8 trillion in 2023 to an estimated N31.9 trillion in 2024, representing 11.5% of GDP.

The World Bank emphasized that this improved fiscal outlook presents a critical opportunity for Nigeria to reprioritize public spending and invest in essential social infrastructure.

“Nigeria has taken commendable steps to restore macroeconomic stability. With an improved fiscal environment, the country is well-positioned to increase both the volume and quality of development spending—especially in human capital, social protection, and infrastructure,” said Taimur Samad, Acting World Bank Country Director for Nigeria.

Samad called for a shift in public spending from unsustainable practices to targeted investments that address development challenges and foster long-term growth.

The report also stressed that sustainable, inclusive growth hinges on boosting productivity in employment-generating sectors. While finance and ICT are among Nigeria’s fastest-growing sectors, their limited capacity to absorb labor has excluded many citizens due to skills gaps and restricted access.

“Global evidence shows that the public sector alone cannot drive sustainable growth and job creation. Nigeria is no exception,” said Alex Sienaert, Lead Economist for Nigeria at the World Bank.

He emphasized the need for the government to not only deliver essential public services but also enable the private sector to invest, innovate, and expand the economy.

The Nigeria Development Update is a key World Bank publication offering regular insights into trends, policy shifts, and risks within Africa’s largest economy.

According to the National Bureau of Statistics, Nigeria’s headline inflation rose to 24.23% in March 2025, up from 23.18% in February, reinforcing the importance of sustained economic reforms.