CBN Policies may Lower Inflation to 22.1%, W’Bank Says
The World Bank has projected that Nigeria’s inflation rate will average 22.1 per cent in 2025, attributing the anticipated decline to the Central Bank of Nigeria’s tight monetary stance aimed at restoring price stability and anchoring inflation expectations.
The projection was contained in a statement published Monday on the World Bank’s website, following the formal launch of the latest edition of the Nigeria Development Update report in Abuja.
The biannual report, titled “Building Momentum for Inclusive Growth,” assesses recent economic trends and policy responses, and outlines priorities for sustaining reforms and promoting inclusive growth.
According to the report, while macroeconomic indicators have improved significantly, particularly GDP growth, revenue mobilisation, and fiscal consolidation, headline inflation remains a pressing concern.
“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.
The World Bank identified the major drivers of elevated inflation in recent years to include the removal of petrol subsidies, exchange rate unification, rising logistics and energy costs, and recurring food supply disruptions.
However, it noted that the Central Bank’s ongoing monetary tightening efforts are starting to show positive signs, with inflationary pressures expected to ease going into 2025.
The report also indicated that Nigeria’s macroeconomic position is steadily improving. The economy grew by 4.6 per cent year-on-year in the fourth quarter of 2024, bringing full-year growth to 3.4 per cent, the strongest outturn since 2014, excluding the post-COVID rebound.
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Fiscal performance also improved sharply, with the consolidated fiscal deficit narrowing from 5.4 per cent of GDP in 2023 to 3.0 per cent in 2024. Total government revenues rose from N16.8tn in 2023 to an estimated N31.9tn in 2024, equivalent to 11.5 per cent of GDP.
With the improved fiscal outlook, the World Bank said Nigeria now had a window of opportunity to restructure public spending and make impactful investments in social infrastructure.
“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,” the acting World Bank Country Director for Nigeria, Taimur Samad, said.
He added that the allocation of public resources should move away from past unsustainable patterns and be redirected towards addressing critical development gaps. The World Bank further stressed that achieving long-term inclusive growth would require accelerating productivity in sectors that create jobs at scale.
It observed that while finance and ICT were among the economy’s top performers, they were not labour-intensive and excluded many Nigerians due to limited access and skills.
“International experience suggests that the public sector cannot sustainably generate growth and jobs by itself. Nigeria is no exception,” World Bank Lead Economist for Nigeria, Alex Sienaert, said.
“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 is one of the World Bank’s flagship economic publications on Nigeria and provides regular analysis of trends, reforms, and risks in Africa’s largest economy.
Nigeria’s headline inflation rose to 24.23 per cent in March 2025, up from 23.18 per cent recorded in February, according to the most recent data released by the National Bureau of Statistics.
