Businesses and consumers in Nigeria have been hard hit by spiraling inflation, which peaked at 34.6 percent, a 28-year high, in November 2024.
The federal government expects inflation rate to cool to 15 percent in 2025, but some economists consider the target ambitious.
Basil Abia, an economist and co-founder of VerivAfrica, said that without effectively addressing key inflation drivers such as high food prices, exchange rates, and excess liquidity, there won’t be sufficient conditions for a substantial decline in inflation.
According to Abia, the 31 percent inflation forecast made by VerivAfrica using the vector autoregressive (VAR) prediction model is likely, noting that it seems more realistic given the nation’s current economic challenges.
The elevated inflation raises the prospect that the Central Bank of Nigeria (CBN) will continue its monetary tightening policy, which has seen the benchmark interest rate climb from 18.75 percent at the end of 2023 to 27.5 percent this year. Last month, Olayemi Cardoso, CBN governor, said the Monetary Policy Committee (MPC) expects inflation to start easing in 2025 because of these measures.
Yvonne Mhango, Africa economist at Bloomberg Economics, said that she sees a path to reduced inflation next year.
“After the higher-than-expected rise in Nigeria’s inflation, we now expect price gains to moderate from January – rather than December – at a slow pace. Rate hikes will persist until the Central Bank of Nigeria achieves its goal of restoring positive real rates – likely in the third quarter of 2025. Falling inflation will give scope for policy to become less restrictive in 4Q25.”
Several experts have predicted Nigeria’s inflation rate for 2025 using different prediction models. For instance, the African Development Bank has predicted 20.7 percent while the International Monetary Fund (IMF) predicted 23 percent.
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