IMF projects Nigeria’s inflation to fall to 15.6% in 2026

By Diden Abigail Owuntarose

Nigeria’s annual average inflation rate is projected to decline to 15.6 per cent in 2026 from 23 per cent recorded in 2025, according to the International Monetary Fund (IMF).

The projection, contained in the IMF’s October 2026 World Economic Outlook, indicates a gradual moderation in price pressures following a period of elevated inflation that weakened household purchasing power and increased operating costs for businesses.

The fund also expects Nigeria’s inflation rate to decline further to 14.7 per cent in 2027, suggesting a gradual improvement in the country’s price outlook.

According to a report by The Punch, analysts at Coronation Research attributed the anticipated slowdown partly to greater exchange rate stability and increased domestic refining capacity, which could help moderate costs across supply chains.

However, the report warned that persistent economic challenges could slow the pace of disinflation, particularly rising energy and fertiliser costs, food supply constraints and increased government spending ahead of the 2027 elections.

The IMF also projected Nigeria’s real gross domestic product to grow by 4.2 per cent in 2026 and 4.3 per cent in 2027, supported by ongoing economic reforms and activity in the non-oil sector.

Despite the improved outlook, a decline in the inflation rate does not necessarily mean that prices will fall. Rather, it indicates that prices are expected to increase more slowly than before, although households may continue to face high costs for food, transportation, housing and other essential goods and services.

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The development comes as Nigerian businesses continue to contend with the cost of raw materials, electricity, transportation and financing, which have affected production expenses and consumer demand.

For manufacturers and small businesses, a sustained reduction in inflation could improve planning and reduce uncertainty over operating costs. However, the extent of any relief will depend on how quickly lower inflation translates into more stable prices for essential inputs and consumer goods.

The IMF’s projections therefore point to a possible easing of inflationary pressures, although risks surrounding energy prices, agricultural production and fiscal policy remain important factors that could influence the pace of recovery