The World Bank expects Nigeria’s inflation rate to fall to 14.3% by 2027 as the country makes good progress with ongoing macroeconomic reforms that have led to rising prices and deepening poverty.
Headline inflation is expected to peak at an average annual rate of 31.7% in 2024, mainly due to a weaker naira and higher petrol prices, the Washington-based financial institution said in its new Nigeria Development Update Report. said.
“In the medium term, recent macroeconomic reforms and their continuation are expected to contribute to a decline in inflation, which is expected to fall to 14.3% by 2027,” the World Bank said.
The World Bank acknowledges that fiscal reforms, while painful, are necessary to save the country from imminent collapse and are beginning to bear fruit.
After reaching a 28-year high of 34.2% in June 2024, Nigeria’s inflation rate began to slow in July and fell to 32.15% in August, reducing purchasing power and diminishing returns. This fueled expectations for a break in households and businesses.
However, against the backdrop of a new total increase of around 50% in gasoline prices nationwide, the data for September jumped to 32.7%, and the surge began again.
According to many analysts, this development will drive prices even higher, adding to the burden on already burdened ordinary Nigerians who are most squeezed by pump prices.
Nigerians currently face rising energy costs, soaring food and transportation prices, and reduced consumer spending.
However, the World Bank cited a series of macroeconomic policy failures in 2015.The year 2023 contributed to a surge in inflation in Nigeria. ”
The report said headline inflation remained largely stable until 2014, in the high single digits or low double digits, not far from levels observed in other major emerging markets.
However, from 2015, the CBN shifted its main focus from price stability, its core mandate, to increase the money supply, and between 2015 and 2023, it has already lost confidence in the naira and pushed up inflation. said.
“As a result, inflation rose sharply even before the series of reforms that began in mid-2023, reaching 22.4% year-on-year in May 2023,” the report said.
In its forecasts, the Bretton Woods institution expects Nigeria’s inflation to begin to moderate, falling to 23.5% by 2025, 18.1% by 2026 and, as a result, 14.3% by 2027.
