A recent poll by Reuters indicates that inflation across Africa is expected to slow down in 2025. However, Nigeria appears to be an exception due to several challenges.
The poll, conducted among 15 analysts, suggests that inflation will decrease in most African countries. This is likely due to a more stable global economic climate and efforts by African governments to control inflation. For example, Ghana’s inflation is predicted to drop significantly from an average of 40.3% last year to 12.1% in 2025. Similarly, inflation in Angola and Zambia is also expected to decline over the next year.
Nigeria, however, faces a different situation. The country is expected to see inflation rise to 29.1% this year before slowing down to 17.2% in 2025. This remains the highest inflation rate among the countries polled.
Analysts attribute Nigeria’s high inflation to several factors. One major reason is the ongoing issue of food price inflation. Food makes up a significant portion (around 50%) of the typical Nigerian household’s expenses. Factors like frequent flooding, fertilizer costs, and insecurity in food-producing areas are driving up food prices.
Another contributor to Nigeria’s inflation is the “difficult terrain” for the Naira currency. A shortage of US dollars throughout the country makes it harder to import goods and stabilize the Naira’s value. While the Central Bank has raised interest rates to combat inflation, analysts predict these measures will have a limited effect on food prices.
Despite the challenges, Nigeria’s financial management team is taking steps to address the situation. The success of these efforts will be crucial in bringing down inflation and ensuring economic stability.
Credit: Nairametrics (Text Excluding Headline)
