Nigeria’s average annual inflation rate is projected to ease to 15.6 per cent in 2026, down from 23 per cent in 2025, before declining further to 14.7 per cent next year, according to the International Monetary Fund (IMF).
The forecast suggests a gradual moderation in price pressures as foreign exchange stability improves and domestic refining capacity expands, although analysts warn that rising input costs and election-related spending could slow the pace of recovery.
Coronation Research, in its review of the country’s economic outlook, identified improved exchange rate stability and increased domestic refining operations as key factors that could support the anticipated decline in inflation.
The research firm, however, cautioned that higher energy and fertiliser prices, alongside increased spending ahead of the 2027 general elections, could undermine efforts to bring inflation under control.
“Exchange rate stability and increased domestic refining capacity could help moderate price pressures. However, higher energy and fertiliser costs, alongside election-related spending, may slow the pace of disinflation,” the firm said.
The projections come amid continued pressure on Nigerian households and businesses, with elevated food prices, production expenses and insecurity affecting agricultural output limiting the benefits of economic adjustments.
A lower inflation rate would mean that prices are increasing at a slower pace, rather than necessarily falling. Consequently, consumers may continue to face high living costs even if the projected moderation materialises.
Beyond inflation, the IMF expects the Nigerian economy to grow by 4.2 per cent in 2026 and 4.3 per cent in 2027, attributing the outlook partly to foreign exchange reforms and sustained activity in the non-oil sector.
Coronation Asset Management also projected a further decline in inflation in 2027, putting its estimate at 14.56 per cent, broadly in line with the IMF’s forecast of 14.7 per cent.
An analyst at the firm said the combination of economic policy reforms and expanding domestic refining operations could provide a foundation for a sustained reduction in price pressures, despite continuing structural challenges.
Nigeria’s recent inflationary pressures have been associated with foreign exchange volatility, higher energy costs, supply chain disruptions and rising food prices.
Reforms to the foreign exchange market and efforts to expand domestic production have formed part of the government’s response to these challenges.
The expansion of local refining is expected to reduce dependence on imported petroleum products and potentially ease fuel-related transportation and production costs. However, the extent of the benefits will depend on how these savings are transmitted across supply chains.
Agricultural input costs, food supply disruptions and fiscal pressures remain significant risks to the inflation outlook. Analysts also warn that increased government spending associated with the approaching election cycle could complicate monetary and fiscal efforts to stabilise prices.
The IMF’s October 2026 World Economic Outlook update, alongside Coronation Research’s assessment, points to a more favourable inflation trajectory for Nigeria. However, translating slower price increases into meaningful improvements in household welfare will depend on stronger purchasing power, improved food supply and a sustained reduction in the cost of doing business.
Leave a Reply