The World Bank has projected that Nigeria’s inflation rate will decline to an average of 22.1% in 2025, attributing the anticipated drop to the Central Bank of Nigeria’s (CBN) sustained tight monetary policies aimed at restoring price stability and anchoring inflation expectations.
This projection was included in a statement published on Monday following the launch of the latest Nigeria Development Update (NDU) report titled “Building Momentum for Inclusive Growth” in Abuja. The biannual report reviews recent economic trends, policy responses, and outlines reform priorities for inclusive growth.
While macroeconomic indicators such as GDP growth, revenue mobilisation, and fiscal consolidation have shown significant improvement, the report noted that headline inflation remains a critical concern. It stated, “Inflation has remained high and sticky but is expected to fall to an annual average of 22.1% in 2025, as a sustained tight stance firmly establishes monetary policy credibility and dampens inflationary expectations.”
The report identified major drivers of elevated inflation over recent years as petrol subsidy removal, exchange rate unification, rising logistics and energy costs, and recurring food supply disruptions. However, it noted that the CBN’s ongoing monetary tightening is beginning to show results, with inflationary pressures expected to ease in 2025.
Nigeria’s macroeconomic performance is also improving steadily. The economy grew by 4.6% year-on-year in Q4 2024, bringing full-year growth to 3.4%, the strongest since 2014 (excluding the post-COVID rebound).
On the fiscal side, the consolidated fiscal deficit narrowed significantly from 5.4% of GDP in 2023 to 3.0% in 2024, while total government revenues surged from ₦16.8 trillion in 2023 to an estimated ₦31.9 trillion in 2024, representing 11.5% of GDP.
With this improved outlook, the World Bank said Nigeria now has a historic opportunity to restructure public expenditure and increase investments in social infrastructure, including education, healthcare, and social protection.
“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.”
He stressed that public spending should shift away from past unsustainable patterns toward targeted development priorities.
For sustained inclusive growth, the World Bank emphasised the need to boost productivity in job-creating sectors, noting that while finance and ICT have performed well, they are not labour-intensive and largely exclude many Nigerians due to limited access and skills.
“The public sector alone cannot sustainably generate growth and jobs. Nigeria is no exception,” said Alex Sienaert, World Bank Lead Economist for Nigeria. He recommended that the public sector should focus on delivering essential services and enabling private sector innovation and investment.
The Nigeria Development Update is a key World Bank economic report offering regular assessments of economic trends, reforms, and risks in 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, highlighting the urgency of monetary and structural reforms.
ADEDEJI TOLU
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