More pain ahead as IMF predicts 37% inflation for Nigeria in 2026

Nigeria’s economic will likely deepen in the coming year as the International Monetary Fund (IMF) projects that inflation will climb again to 37% in 2026, following a temporary slowdown.

The grim forecast comes even after the National Bureau of Statistics (NBS) rebased its inflation calculations earlier this year, lowering headline rates.

In its April 2025 World Economic Outlook, the IMF said inflation would average 26.5% in 2025, down from 33.2% in 2024. But the relief may be short-lived. By 2026, rising prices are expected to accelerate again, underscoring the fragility of Nigeria’s cost-of-living situation.

The NBS had in January shifted the base year for its Consumer Price Index (CPI) from 2009 to 2024, to reflect more current household spending habits. As a result, reported inflation dropped sharply—from 34.80% in December 2024 to 24.48% in January 2025.

While February saw further easing to 23.18%, inflation ticked back up to 24.23% in March, signalling that hardship remains entrenched, especially with persistently high food prices.

Despite Nigeria’s Central Bank holding its benchmark interest rate at 27.5%, inflationary pressures remain widespread. The IMF praised Nigeria’s policy actions — like removing fuel subsidies and ending central bank deficit financing, that have caused unprecedented economic hardship — but said deeper reforms are needed to fix structural bottlenecks and boost productivity.

Dim Growth

The broader economic picture is also dimming. The IMF revised Nigeria’s growth forecast for 2025 down to 3.0%, from 3.4% in 2024, and expects further slowing to 2.7% in 2026, citing weaker oil revenues and global trade uncertainty. Real per capita growth—reflecting income gains for ordinary Nigerians—is expected to rise by just 0.6% in 2025 and 0.3% in 2026, well below regional averages.

Meanwhile, external risks loom. Nigeria’s current account surplus, buoyed by oil earnings and a recent balance of payments rebound, is expected to shrink from 9.1% of GDP in 2024 to 5.2% in 2026. Analysts warn that any sustained drop in oil prices could tip the country back into deficit, threatening the fragile recovery.

Globally, the IMF warns of rising trade tensions, policy uncertainty, and slowing growth, with emerging markets like Nigeria likely to feel the sharpest effects. For most Nigerians, this means the promise of relief remains distant, while prices, unemployment, and inequality continue to erode household stability.