HomeBusinessNigeria’s Inflation Set to Decline to 26 percent in 2025 – PwC

Nigeria’s Inflation Set to Decline to 26 percent in 2025 – PwC

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KEY POINTS


  • According to PwC’s forecast the country’s inflation will reach 26% in 2025 because of tightened policies.
  • The Central Bank of Nigeria and enhanced foreign exchange inflows should stabilize the currency exchange rate according to exchange rate stability forecasts.
  • Nigeria’s economic growth for 2025 is expected to reach 3.3% but fiscal challenges remain unresolved.

PwC Partner and West African Stategy Leader Olusegun Zacchaeus predicts the Nigerian inflation rate will fall to 26 percent during 2025.

The dual effects of monetary tightening and favorable exchange rate activity lead to this forecast according to him.

Zacchaeus said the Central Bank of Nigeria’s (CBN) exchange rate reforms will contribute to currency stabilization and improved inflows during his address at PwC’s roundtable with BusinessDay on the 2025 Budget.

Economic stakeholders gathered at the “Insights and Strategies for Navigating Nigeria’s Economic, Fiscal and Policy Landscape in 2025” themed event to examine the country’s economic prospects through 2025.

The stable exchange rate projection for 2025 would be sustained through CBN reforms which targeted market confidence together with improved liquidity.

Economic and fiscal outlook

Zacchaeus declared that while inflation and exchange rates would improve in 2025 the government would face ongoing financial problems.

The government’s fiscal deficit in August of 2024 surpassed its approved budget limit of 3.8 percent to reach 7.6 percent the GDP. The economy will face sustainability challenges because of high debt servicing costs together with substantial fiscal deficits.

According to his projections Nigeria’s Gross Domestic Product will expand at a slow rate of 3.3 percent throughout 2025 because of continued policy advancements. Economic pressures coupled with restricted investment upstreams are expected to restrict future growth potential.

Potential constraints on growth come from both economic stress levels and sparse investment flows.

Stability in exchange rates requires four fundamental elements which include how prices are discovered and then defined through transparency in addition to liquidity and market trust levels according to Zacchaeus.

Experiences of high volatility in 2024 with a 39.8 percent depreciation of the naira despite rising foreign exchange reserves to $38.67 billion would only reduce if the major exchange factors received adequate attention according to Zacchaeus.

During December 2024 inflation reached 34.8 percent while food expenses together with transport costs and utility bills demonstrated highest impacts on the rate.

The 2025 inflation outlook exists between monetary policy actions that tighten and enhanced supply and cyclical market movements.

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