The World Bank has projected that Nigeria’s inflation rate will decline to 12.2 per cent by 2028, reflecting expectations of continued macroeconomic stabilisation and an improving external financial position.
The forecast, contained in the October 2026 Africa Economic Update, indicates that inflation could moderate to 15.7 per cent in 2026 from 23.0 per cent in 2025.
The projections were highlighted in an economic research assessment published by Coronation Asset Management.
According to the report, improving foreign exchange conditions, stronger crude oil production and external reserve accumulation are contributing to Nigeria’s economic outlook.
However, the country remains exposed to renewed inflationary pressures arising from energy prices, food costs and geopolitical disruptions.
Inflation Expected to Moderate
The World Bank expects Nigeria’s inflation rate to decline significantly over the forecast period.
From an estimated 23.0 per cent in 2025, inflation is projected to ease to 15.7 per cent in 2026.
The forecast anticipates a further reduction to 12.2 per cent by 2028.
The outlook suggests that the pace of increases in consumer prices could continue to moderate.
However, declining inflation does not necessarily mean that the prices of food, transportation and other essential goods will fall.
It means that overall prices are expected to increase at a slower rate.
For households, improvements in purchasing power will also depend on income growth and employment opportunities.
August Inflation Stands at 15.39%
The Coronation report placed Nigeria’s inflation rate at 15.39 per cent in August 2026.
It identified the reading as the third consecutive month of declining inflation.
The development provides context for expectations of further price moderation.
However, inflation remains sensitive to domestic supply conditions and external developments.
Higher fuel prices can increase transportation and distribution costs.
Rising fertiliser prices may also affect agricultural production.
These pressures can eventually influence food prices and household expenditure.
External Reserves Support Economic Stability
The report highlighted improvements in Nigeria’s external financial position.
Gross external reserves stood at approximately $54.93 billion, according to the figures presented in the economic note.
Net external reserves were reported at about $46 billion, compared with $34 billion at the end of 2025.
The increase in net reserves represents an improvement of approximately $12 billion.
External reserves can strengthen confidence in a country’s capacity to meet foreign currency obligations.
They may also provide support during periods of international financial volatility.
However, reserve growth does not eliminate the possibility of exchange rate fluctuations.
Current Account Surplus Expected to Widen
The World Bank projects Nigeria’s current account surplus to widen to 6.0 per cent of gross domestic product in 2026 from 4.8 per cent.
A current account surplus generally indicates that a country’s receipts from international trade, income and transfers exceed its corresponding payments.
The improvement would support Nigeria’s external balance.
However, the surplus is projected to moderate to 3.4 per cent of GDP by 2028.
The report linked the expected moderation to normalising oil prices and stronger import demand.
This suggests that the external position could become less favourable as economic activity and import requirements increase.
Stronger Oil Production Supports Outlook
Crude oil production remains important to Nigeria’s external earnings.
The economic note reported that oil production reached approximately 1.70 million barrels per day in the second quarter of 2026.
It also identified June as a period when production reached a 74-month high.
Stronger production can support foreign exchange earnings and public revenue.
It may also improve the country’s capacity to meet domestic and international financial obligations.
However, the benefits depend on production continuity, market prices and the efficiency of revenue management.
Exchange Rate Stability Remains Important
The report identified relatively stable foreign exchange conditions as another factor supporting Nigeria’s economic outlook.
Exchange rate stability can help businesses plan transactions and manage imported input costs.
It may also support investor confidence.
However, the availability of foreign exchange remains important alongside the prevailing rate.
Businesses with international payment obligations require predictable access to foreign currency.
For Nigeria, sustaining foreign exchange inflows from exports and investment will remain central to external stability.
Global Energy Prices Pose Inflation Risk
The World Bank warned that renewed increases in fuel, food and fertiliser costs could threaten the expected inflation decline.
The Middle East conflict has created pressure on international energy and shipping markets.
Higher energy costs can affect domestic transportation, manufacturing and electricity generation.
Similarly, disruptions to global supply chains may increase the cost of imported goods.
These developments could slow inflation moderation even if domestic economic conditions improve.
Insecurity and Fiscal Pressures Remain Concerns
The report also identified insecurity, oil production disruptions and rising pre-election expenditure as potential risks.
Insecurity can affect farming, logistics and commercial activity.
Disruptions in oil production could weaken export earnings.
Meanwhile, increased fiscal pressure ahead of the 2027 elections could complicate economic management.
Tighter global financial conditions may also increase borrowing costs and reduce capital flows to emerging economies.
Sustaining Economic Stability Is the Main Challenge
Coronation Research described the World Bank’s outlook as broadly consistent with improving Nigerian macroeconomic fundamentals.
However, it emphasised the importance of sustaining disinflation, foreign exchange stability and private investment.
The report suggested that the durability of Nigeria’s economic recovery will depend on domestic policy execution and the persistence of external shocks.
For households and businesses, the projected reduction in inflation would be a positive development.
Nevertheless, its practical impact will depend on whether income growth, employment and productive investment improve alongside broader economic stability.
