The World Bank anticipates that Nigeria's inflation rate will decrease to 14.3% as a result of implemented reforms.

The World Bank anticipates that Nigeria's inflation rate will decrease to 14.3 percent by 2027, provided the country continues its current macroeconomic reforms, which have contributed to rising prices and increased poverty levels.

In its latest Nigeria Development Update report, the Washington-based institution forecasts that headline inflation will reach an average annual peak of 31.7 percent in 2024, primarily due to the naira's depreciation and rising gasoline costs.

The World Bank stated, "In the medium term, the ongoing macroeconomic reforms and their persistence will facilitate a reduction in inflation, projected to decline to 14.3 percent by 2027."

While acknowledging the painful nature of fiscal reforms, the Bank emphasizes their necessity to prevent the country from facing imminent collapse, noting that these reforms have started to produce positive outcomes.

After hitting a 28-year high of 34.2 percent in June 2024, Nigeria's inflation began to slow down in July, dropping to 32.15 percent in August, offering a glimmer of hope for households and businesses that have experienced diminished purchasing power.

However, inflation surged again in September, rising to 32.7 percent due to a nearly 50 percent increase in petrol prices nationwide.

Analysts suggest that this trend will further exacerbate price increases and intensify the financial strain on ordinary Nigerians, who are already feeling the impact of rising fuel costs.

Currently, Nigerians are contending with escalating energy expenses, soaring food prices, increased transportation fares, and declining consumer spending.

The World Bank noted that "a series of macroeconomic policy errors from 2015 to 2023 contributed to the inflation spike in Nigeria."

The report indicates that headline inflation remained relatively stable until 2014, typically in the high single digits or low double digits, comparable to levels seen in other major emerging markets.

The report indicated that starting in 2015, when the Central Bank of Nigeria (CBN) shifted its primary focus away from its core mandate of price stability, there was a notable increase in money supply. This change led to a decline in confidence in the naira between 2015 and 2023, which in turn contributed to rising inflation.

Consequently, inflation was already on the rise, reaching 22.4 percent year-on-year in May 2023, even prior to the series of reforms initiated in mid-2023, as highlighted in the report.

Looking ahead, the Bretton Woods institution projects that Nigeria's inflation will begin to ease, with expectations of a decrease to 23.5 percent by 2025, 18.1 percent by 2026, and further down to 14.3 percent by 2027.