Nigeria’s average annual inflation rate is projected to witness a significant decline in the coming years, according to the latest economic assessment released by the International Monetary Fund.

The Bretton Woods institution has projected that the country’s average annual inflation rate will drop to 15.6 percent in 2026 and further ease to 14.7 percent in 2027.

This forecast was contained in the IMF’s latest economic outlook report, which reviewed Nigeria’s macroeconomic performance and future prospects.

According to the Fund, the projected decline represents a major improvement when compared to the average inflation rate of 23 percent recorded in the year 2025.

The IMF noted that Nigeria’s inflationary trend, which had remained stubbornly high in recent years, is beginning to show signs of moderation due to various policy interventions.

The global financial institution attributed the expected slowdown in inflation to a combination of domestic reforms and external factors that are gradually stabilizing the economy.

Economic analysts at Coronation Research have also weighed in on the IMF’s projection, offering insights into what is driving the anticipated moderation.

According to Coronation Research, the projected decline in inflation is largely linked to ongoing macroeconomic stabilization measures being implemented by the Federal Government and the Central Bank of Nigeria.

The analysts pointed out that greater stability in the foreign exchange market has played a crucial role in easing price pressures across different sectors of the economy.

They explained that the relative stability of the Naira in recent months has helped to reduce the cost of imported goods and raw materials, which in turn has moderated domestic prices.

Another key factor identified by the analysts is the expanding domestic refining capacity, particularly with the coming on stream of local refineries.

The analysts noted that increased local refining of petroleum products is expected to significantly reduce the country’s dependence on imported fuel.

This development, according to them, will help to lower transportation costs and ease inflationary pressures along the entire supply chain.

They stressed that fuel and transportation costs are major drivers of inflation in Nigeria, and any reduction in those costs will have a multiplier effect on the general price level.

Coronation Research also highlighted that improved supply chain efficiency and better distribution of goods are contributing to the gradual slowdown in inflation.

The research firm stated that as supply bottlenecks are addressed and domestic production improves, the cost of goods and services is expected to become more stable.

However, despite the optimistic projection, the analysts cautioned that there are still persistent economic risks that could slow down the pace of relief for businesses and consumers.

They warned that structural challenges such as insecurity, infrastructure deficits and low productivity in key sectors could limit the extent of the decline in inflation.

According to them, insecurity in food-producing areas continues to affect agricultural output and food supply, which remains a major component of Nigeria’s inflation basket.

The analysts also pointed out that high energy costs, poor road networks and multiple taxation are still increasing the cost of doing business in the country.

They noted that these factors could prevent the projected drop in inflation from translating into immediate relief for ordinary Nigerians.

Furthermore, Coronation Research stated that global economic uncertainties, including fluctuations in oil prices and geopolitical tensions, could also impact Nigeria’s inflation trajectory.

The firm advised that sustained policy consistency and implementation of reforms will be crucial to achieving the projected inflation figures.

It called on the government to intensify efforts aimed at boosting domestic production, improving security and addressing infrastructure challenges.

Economic stakeholders have expressed hope that if the projection materializes, it would lead to improved purchasing power for consumers and better planning for businesses.

They noted that a lower inflation rate would also create room for a reduction in interest rates, thereby encouraging borrowing, investment and overall economic growth.