The World Bank has projected that Nigeria’s inflation rate will average 22.1% in 2025, attributing this expected decline to the Central Bank of Nigeria’s (CBN) continued tight monetary policy, aimed at restoring price stability and anchoring inflation expectations.
This forecast was published in a statement on the World Bank’s website following the official launch of the latest Nigeria Development Update (NDU) report on Monday in Abuja. The report, titled “Building Momentum for Inclusive Growth”, offers an assessment of recent economic trends and policy responses, while outlining priorities for sustaining reforms and promoting inclusive growth.
Inflation Outlook and Economic Improvements
Despite some positive developments in macroeconomic indicators, particularly GDP growth, revenue mobilization, and fiscal consolidation, inflation remains a major concern. The World Bank report highlighted that inflation has been “sticky” but noted that it is expected to ease over the next year, projecting an annual average of 22.1% in 2025. The improvement is anticipated due to the CBN’s sustained tight stance, which is expected to enhance monetary policy credibility and dampen inflationary expectations.
According to the World Bank, key drivers of the elevated inflation in recent years include:
- Petrol subsidy removal
- Exchange rate unification
- Rising logistics and energy costs
- Food supply disruptions
The report acknowledged, however, that the CBN’s monetary tightening is starting to show signs of success, with inflationary pressures expected to ease into 2025.
Macroeconomic Performance and Fiscal Outlook
The report also noted that Nigeria’s overall macroeconomic position is improving. GDP growth for the fourth quarter of 2024 was 4.6%, resulting in a full-year growth of 3.4% the strongest growth since 2014, excluding the post-COVID rebound.
Fiscal performance also improved significantly. The consolidated fiscal deficit narrowed from 5.4% of GDP in 2023 to 3.0% in 2024. Moreover, government revenues surged from ₦16.8 trillion in 2023 to an estimated ₦31.9 trillion in 2024, representing 11.5% of GDP.
Opportunity for Social Infrastructure Investment
With the improved fiscal outlook, the World Bank highlighted that Nigeria now has a historic opportunity to restructure its public spending. This could include making impactful investments in social infrastructure, especially in areas like human capital, social protection, and overall infrastructure development.
Taimur Samad, the acting World Bank Country Director for Nigeria, emphasized that Nigeria’s progress in restoring macroeconomic stability provides an opportunity to refocus public resources. He noted that public expenditure should move away from past unsustainable patterns and be redirected towards addressing critical development gaps.
The Role of the Private Sector in Driving Growth
The World Bank report also pointed out that while sectors like finance and ICT have been top performers, they are not labour-intensive and often exclude many Nigerians due to limited access and skills. To achieve long-term inclusive growth, the World Bank emphasized the need to accelerate productivity in sectors that create jobs at scale.
Alex Sienaert, the Lead Economist for Nigeria at the World Bank, argued that the public sector alone cannot sustainably drive growth and job creation. He suggested that the public sector should focus on being both a provider of essential services and an enabler for the private sector, fostering an environment for investment and innovation to grow the economy.
Inflation Update
As of the most recent data from the National Bureau of Statistics (NBS), Nigeria’s headline inflation rose to 24.23% in March 2025, up from 23.18% in February 2025.
