IMF projects Nigeria’s inflation rate to average 26.5% in 2025, soar to 37.0% in 2026

• The International Monetary Fund said Nigeria’s inflation will average 26.5 per cent in 2025 and soar to 37.0 per cent in 2026
• It said Nigeria’s economy will grow at a slower pace in 2025, with real Gross Domestic Product now projected to grow by 3.0 per cent in 2025 from an earlier forecast of 3.2 per cent
• The IMF also projected that Nigeria’s current account surplus would decline amid a continued fall in oil prices

The International Monetary Fund (IMF) says Nigeria’s headline inflation will average 26.5 per cent in 2025, following a recent rebasing of the Consumer Price Index (CPI) by the National Bureau of Statistics (NBS).

The IMF also projected that though the inflation rate declined from the 33.2 per cent recorded in 2024, the rate is expected to surge to 37.0 per cent in 2026.

Recall that the IMF earlier projected that Nigeria’s inflation rate would drop to 25 per cent in 2025 and further fall to 14 per cent by 2029.

This is contained in the IMF’s April 2025 World Economic Outlook (WEO), warning that despite a temporary slowdown in inflation, price stability is far from being achieved.

Recall that the inflation rate eased to 24.48 per cent in January 2025 from 34.80 per cent in December 2024, following the rebasing of the CPI.

The rate further reduced for the second consecutive month to 23.18 per cent in February before rising to 24.23 per cent in March.

IMF forecasts Nigeria’s economy to grow more slowly in 2025

The IMF further forecasted that Nigeria’s economy will grow at a slower pace in 2025 than it had earlier projected.

According to the IMF, Nigeria’s real Gross Domestic Product (GDP) is now projected to grow by 3.0 per cent in 2025, marking a 0.2 percentage point downgrade from an earlier forecast of 3.2 per cent and below the 3.4 per cent growth estimated for 2024.

The Fund said the adjustment was primarily because of the continued fall of oil prices, which would impact the country’s fiscal and external balances as energy exports remain Nigeria’s key source of foreign exchange and public revenue.

The IMF added that the real GDP growth rate is expected to further slow by 0.3 percentage points to 2.7 per cent in 2026.

“For sub-Saharan Africa, growth is expected to decline slightly from four per cent in 2024 to 3.8 per cent in 2025 and recover modestly in 2026, lifting to 4.2 per cent.

“Among the larger economies, the growth forecast in Nigeria is revised downward by 0.2 percentage point for 2025 and 0.3 percentage point for 2026, owing to lower oil prices, and that in South Africa is revised downward by 0.5 percentage point for 2025 and 0.3 percentage point for 2026, reflecting slowing momentum from a weaker-than-expected 2024 outturn, deteriorating sentiment due to heightened uncertainty, the intensification of protectionist policies, and a deeper slowdown in major economies,” the IMF’s report read.

Nigeria’s current account surplus projected to decline

The IMF also projected that Nigeria’s current account surplus will reduce from 9.1 per cent of GDP in 2024 to 6.9 per cent in 2025, and further decline to 5.2 per cent in 2026.

According to recent data by the Central Bank of Nigeria (CBN), Nigeria recorded a Balance of Payments surplus of $6.83 billion in 2024, the first in three years.

The increase was driven by a $17.22 billion surplus in the current and capital account, supported by a goods trade surplus of $13.17 billion.

The IMF projection, however, shows that the sustainability of this surplus remains a challenge.

According to JP Morgan, Nigeria’s current account may reverse to a deficit if oil prices continue to be sustained below Nigeria’s fiscal breakeven of $60 per barrel.

Fitch Ratings, on the other hand, projected that Nigeria’s current account, estimated at 6.6 per cent of GDP in 2024, would moderate to an average of 3.3 per cent of GDP in 2025 and 2026, supported by improved refinery projects and reforms in the country’s energy sector.

Stagnant income per capita

The IMF also highlighted a weak growth in income among Nigerians, projecting Nigeria’s real per capita output to grow by just 0.6 per cent in 2025 and 0.3 per cent in 2026, an indication of minimal gains in individual income levels despite overall growth.

The per capita income growth projection is below the average for Sub-Saharan Africa, reflecting the continued inequality and weak household purchasing power.

IMF says Tinubu’s economic reforms yet to benefit Nigerians

Meanwhile, TheRadar earlier reported that the International Monetary Fund (IMF) said the President Bola Tinubu-led Federal Government’s tough economic reforms have not yet benefited the average Nigerian after nearly two years of their introduction.

The IMF disclosed this in a statement on Friday, April 18, by the IMF Mission Chief for Nigeria, Axel Schimmelpfennig.