The World Bank has forecast an average inflation rate of 22.1% for Nigeria in 2025, citing ongoing monetary tightening efforts by the Central Bank of Nigeria (CBN) as a key reason for the expected decline.
The projection was shared on Monday in a statement published on the institution’s website, coinciding with the release of its latest Nigeria Development Update in Abuja.
Titled “Building Momentum for Inclusive Growth,” the biannual report offers an in-depth look at recent economic performance, policy interventions, and strategies for sustained and inclusive economic development.
Although Nigeria’s macroeconomic fundamentals—such as GDP growth, revenue generation, and fiscal consolidation—have shown marked improvement, headline inflation remains a significant challenge, the report noted.
“The report further adds that inflation has remained high and sticky but is expected to fall to an annual average of 22.1 per cent in 2025, as a sustained tight stance firmly establishes monetary policy credibility and dampens inflationary expectations,” the statement read.
Key factors behind the inflationary pressures include the removal of fuel subsidies, the merging of exchange rates, soaring energy and logistics costs, and disruptions in food supply. Nonetheless, the World Bank acknowledged that the CBN’s policy tightening appears to be yielding early signs of relief.
It also highlighted the broader economic recovery, noting that the Nigerian economy expanded by 4.6% year-on-year in the final quarter of 2024. This pushed the annual growth rate to 3.4%, the highest since 2014, excluding the post-pandemic recovery.
On the fiscal side, the deficit narrowed significantly—from 5.4% of GDP in 2023 to 3.0% in 2024—while total government revenue surged from N16.8 trillion to an estimated N31.9 trillion, now amounting to 11.5% of GDP.
“Nigeria has made impressive strides to restore macroeconomic stability. With the improvement in the fiscal situation, Nigeria now has a historic opportunity to improve the quantity and quality of development spending; investing more in human capital, social protection, and infrastructure,” said Taimur Samad, the acting World Bank Country Director for Nigeria.
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He emphasized the need to reallocate public resources from historically unsustainable areas to more impactful sectors that could address long-standing development deficits.
The report also stressed that for inclusive growth to take root, productivity must be boosted in sectors capable of generating mass employment. It observed that while industries like finance and ICT performed strongly, they remain largely capital-intensive and exclude many Nigerians due to limited access and skill gaps.
“International experience suggests that the public sector cannot sustainably generate growth and jobs by itself. Nigeria is no exception,” said Alex Sienaert, the World Bank’s Lead Economist for Nigeria.
“A useful strategy is to position the public sector to play a dual role as a provider of essential public services… and as an enabler for the private sector to invest, innovate, and grow the economy,” he added.
The Nigeria Development Update remains one of the World Bank’s major reports on the country, providing ongoing insights into economic trends, policy reforms, and risks.
Recent data from Nigeria’s National Bureau of Statistics shows headline inflation rose to 24.23% in March 2025, up from 23.18% in February, underscoring the urgency of effective policy interventions.
