IMF Predicts Nigeria's Inflation Will Drop To 26% Despite Ongoing Increases

The International Monetary Fund (IMF) anticipates that this year, Nigeria's inflationary pressure will drop to 26%.

The fund discussed Nigeria's economic growth trajectory at a press conference in Washington, DC, on Tuesday, along with worldwide estimates from its World Economic Outlook.

Nigerians continue to face significant challenges as a result of inflation, which also makes corporate activities in the nation more difficult.

The Central Bank of Nigeria (CBN) increased interest rates by 400 basis points (bps), the highest increase in recent memory, to 22.75 percent on February 27 in an effort to curb the inflationary upswing.

The monetary policy rate (MPR) was increased by an additional 200 basis points to 24.75 percent by the regulator.

Nevertheless, Nigeria's inflation rate has risen even further, reaching 33.20 percent in March from 31.70 percent in February. This is an extension of the increases observed between 2022 and 2023.

Daniel Leigh, division leader of the IMF's research department, did, however, state during the press conference that Nigerian inflation will reduce in tandem with the estimated worldwide inflationary pressures, which are expected to drop from 2.8 percent at the end of 2024 to 2.4 percent at the end of 2025.

Growth in Nigeria steady, but actually rising this year from 2.9 percent last year to 3.3 percent this year," Leigh said.

“We've seen expansion from the recovery in the oil sector with a better security situation, and also improved agriculture, benefiting from the better weather conditions and the introduction of dry season farming.

“So, there's a broad-based increase also in the financial sector in the IT sector. Inflation Yes, it has increased. Part of this reflects the reforms in the exchange rate. So this explains also why we revised our inflation projection for this year at 26%.

“But with the tight monetary policies and the significant interest rate increases during February and March, we see inflation declining to 23% next year and then 18% in 2026. So in the right direction.”

Also, the lender requested that central banks everywhere make sure inflation is steadily returning to target.