The International Monetary Fund (IMF) has projected Nigeria’s inflation rate to average 26.5 percent in 2025 as structural constraints and weak income growth continue to challenge monetary stability and household consumption.
In its April 2025 World Economic Outlook, the IMF noted that although headline inflation is expected to moderate from 33.2 percent in 2024, price pressures remain elevated across food, energy and core consumer segments.
The Fund attributed the trend to persistent supply chain disruptions, rising production costs and sustained naira volatility.
The report flagged low real income growth as a critical factor limiting domestic demand and worsening poverty conditions. Nigeria’s real output per capita is projected to expand by only 0.6 percent in 2025 and 0.3 percent in 2026, levels that remain below the Sub-Saharan African average and point to limited progress in improving living standards.
According to the IMF, consumer purchasing power remains under pressure despite ongoing monetary tightening by the Central Bank of Nigeria.
The apex bank maintained the Monetary Policy Rate at 27.5 percent in February in an effort to contain inflation and stabilise the exchange rate.
However, the Fund warned that elevated money supply and weak wage growth will continue to fuel core inflation.
The inflation outlook follows Nigeria’s rebasing of the Consumer Price Index in January 2025 which shifted the base year from 2009 to 2024.
The updated index initially recorded a decline in headline inflation to 24.48 percent in January, down from 34.80 percent in December 2024.
It fell further to 23.18 percent in February but rose to 24.23 percent in March, reflecting continued pricing pressure.
The IMF’s projection signals the need for coordinated fiscal and monetary interventions to address structural inefficiencies in agriculture, logistics and energy.
It also underscores the importance of wage reforms and job creation to stimulate demand and support price stability.
While the IMF anticipates a modest decline in average inflation next year, it expects a renewed surge to 37.0 percent in 2026 if supply-side constraints persist and policy transmission remains weak.
Analysts have called for stronger coordination between fiscal authorities and the monetary regulator to manage inflation expectations and reduce the cost of living burden.
The IMF’s outlook also highlighted the risks of low productivity growth and underinvestment in human capital as barriers to sustainable recovery.
With per capita income growth lagging behind inflation, most households are expected to face continued erosion of real income through 2025.
To mitigate these challenges, the Fund recommended targeted fiscal support measures to protect vulnerable groups and accelerate implementation of structural reforms that improve domestic production, reduce reliance on imports and expand non-oil revenue generation.
The Central Bank and the Ministry of Finance are expected to review the IMF’s inflation and income projections as part of ongoing policy evaluation ahead of the 2025 Medium-Term Expenditure Framework.
