PwC sees inflation easing to 26%, naira stabilising in 2025

Nigeria’s sky-high inflation will decline to 26 percent, with naira strengthening for the most part of this year on reforms by the Central Bank of Nigeria (CBN), a new projection has shown.

These expectations were contained in PwC’s ‘Nigeria’s 2025 Budget and Economic Outlook’, assuring of a relief after an end of a tumultuous year for business owners and households.

“Inflation is forecasted to decrease to about 26 percent in 2025, driven by tighter monetary policies, improvements in Nigeria’s foreign exchange dynamics, and baseline effects,” the professional services provider said.

PwC’ position is however contrary to that of the federal government which sees inflation drastically falling to 15 percent by the end of the year, an ambition many experts have held divergent views.

Africa’s most populous nation is grappling with an unprecedented rising inflation that hit an over three decade high of 34.8 percent in December.

Read also: Here’re five projections of naira, inflation in 2025

Even with the plan to rebase the economy, analysts said inflationary pressures may not be abated as 2024 – a year that prices reached record — is to be adopted as the base year.

The tax and advisory firm also revealed that Nigeria’s GDP is projected to grow by 3.3 percent in 2025, boosted by sustained policy reforms.

It however noted that growth prospects may be constrained by persistent economic pressures as a result of varying structural challenges.

Nigeria’s volatile naira is equally expected to maintain greater stability on the back of various reforms implemented by the apex Bank.

Read also: Naira stability cools off imported inflation to five-year low

The Olayemi Cardoso CBN has, through various reforms such as the recently launched Electronic Foreign Exchange Matching Systems and Foreign Exchange code, ensured transparency and efficiency in the market.

These policies have seen the naira hit its strongest stance in eight months, boosting investor confidence in the currency denominated assets.

“The exchange rate is anticipated to stabilise in 2025, supported by ongoing foreign exchange reforms by the Central Bank of Nigeria, which are expected to boost foreign exchange inflows,” PwC said.

The report highlighted strategies business leaders may adopt to boost productivity, profits and overall operational efficiency amid economic challenges.

It said firms should “reinvent your business model”, “rethink costs through core capabilities”, “redefine your funding and capital strategy” and “re-evaluate your talent strategy”.