Disproportionate Inflation Trajectory: A global and Nigerian perspective – challenges, realities, and prospects for economic resurgence

Inflation remains one of the most pressing economic challenges globally, and its ramifications are increasingly felt by populations across the world. Inflation, as defined by the International Monetary Fund (IMF), is the rate at which the general level of prices for goods and services increases over time, eroding purchasing power and destabilising economies.

In 2023, the global inflation rate was projected at 6.8%, with expectations for a slight decrease to 5.9% in 2024 and 4.5% in 2025. As of today, September 2025, the global inflation rate has edged down to around 5.2%, indicating some progress in reducing price pressures. Advanced economies, such as the United States and the European Union, have experienced a steady decline in inflation, with rates expected to hover between 3.5% and 4.0%in 2025-2026.

This improvement is largely attributed to tightening monetary policies, easing supply chain disruptions, and efforts to manage energy prices, particularly oil. However, many developing nations, especially those heavily reliant on global commodity prices, continue to face inflationary challenges. The World Bank still warns of ongoing risks, particularly due to geopolitical tensions, the war in Ukraine, and the persistent aftershocks of the COVID-19 pandemic.

Inflation in Nigeria: A Closer Look at 2025

When it comes to Nigeria, the situation has become more dire. In 2024, Nigeria’s inflation rate stood at a staggering 34.6%—a level that reflects the economic instability exacerbated by the removal of petroleum subsidies, the floating of the Naira, and dwindling oil revenues. As of today, September 2025, Nigeria’s inflation rate remains persistently high at 28.2%. Although the rate has decreased slightly, it is still a major threat to economic stability, particularly for the millions of Nigerians living below the poverty line.

Several key factors continue to drive Nigeria’s inflation:

• High fuel prices, post-subsidy removal, have led to increased transportation costs, which are passed on to consumers in the form of higher prices for goods and services.
• Currency devaluation, with the Naira losing significant value against the U.S. dollar, has inflated the cost of imports, contributing to higher prices for essential goods, including food and medicine.
• Supply chain issues linked to both global disruptions and internal inefficiencies in infrastructure have compounded the price increases.

What’s Working in Nigeria: Positive Developments and Efforts

While Nigeria’s economic performance remains challenging, certain policies and actions are beginning to show promise:

1. Economic Diversification: The Nigerian government has made concerted efforts to reduce its dependence on oil revenues, focusing on boosting sectors like agriculture, technology, renewable energy, and manufacturing. These efforts, if sustained, could help cushion the economy against external shocks.
2. Efforts to Stabilise the Naira: Although the Naira has continued to depreciate, the recent introduction of foreign exchange controls and reforms in the central bank have provided some stability to the currency, albeit marginally.
3. Support for SMEs: The Nigerian government has focused on fostering entrepreneurship through increased support for Small and Medium Enterprises (SMEs), with targeted funding and initiatives like the Central Bank of Nigeria’s (CBN) Anchor Borrowers Programme, aimed at revitalising agriculture and small businesses. Some regions have seen tangible progress in the expansion of these sectors.
4. Fiscal Discipline: The Nigerian government has sought to reduce excessive spending through tighter fiscal policies, reducing the public sector wage bill and attempting to curb wasteful expenditures.

What’s Not Working: The Struggles and Failures

However, several factors continue to undermine these efforts, leading to poor economic outcomes:

1. Inconsistent Policy Implementation: Despite the introduction of positive policies, inconsistent enforcement and lack of long-term planning have led to minimal impact. For example, while the floating of the Naira was intended to stabilise the currency, it has exacerbated inflation due to the country’s low production capacity and overreliance on imports.
2. High Unemployment and Poverty: Despite attempts to support businesses and create jobs, unemployment rates remain alarmingly high, and Nigeria has continued to experience rising poverty levels. The absence of a robust social safety net means many Nigerians are left vulnerable, with insufficient protection from the consequences of economic hardship.
3. Poor Infrastructure and Corruption: Infrastructure deficits, particularly in transportation, energy, and agriculture, continue to fuel inflationary pressures. Corruption and bureaucratic inefficiency further impede the effectiveness of policies designed to address these issues.
4. Overdependence on Global Factors: As a heavily oil-dependent economy, Nigeria remains vulnerable to external shocks, such as fluctuations in global oil prices and geopolitical instability. The lack of self-sufficiency in key sectors such as food production and energy supply exacerbates the country’s vulnerability to global inflationary trends.

Global Inflation Trends: A Mixed Picture

Globally, the trend has been more optimistic, but the outlook remains mixed. While the IMF forecasts a further decline in global inflation over the next few years, geopolitical risks—especially in Europe and Asia—continue to pose significant threats to economic stability. The war in Ukraine, for example, has continued to drive up energy prices, particularly in Europe, leading to inflationary pressures that have spilt over into other parts of the world.

On the other hand, advanced economies like the United States, Japan, and Germany are now seeing inflation rates stabilising closer to 2-3%, within central banks’ target ranges. These economies have managed to contain inflation largely through aggressive monetary tightening, including interest rate hikes, which have helped control price rises but at the cost of slower economic growth.

Emerging economies, particularly in Africa, Latin America, and parts of Asia, continue to face severe inflationary challenges, driven by supply chain bottlenecks, food price increases, and currency depreciation. Countries like Argentina, Turkey, and Nigeria face double-digit inflation, struggling to balance economic reforms with the need to protect their populations from rising costs.

A Way Forward for Nigeria and the World

To effectively combat inflation, both Nigeria and global economies must adopt more inclusive, long-term strategies:

1. Strengthening Local Production and Self-Sufficiency: For Nigeria, a more diversified economy that focuses on increasing local production of food, energy, and key manufactured goods will help reduce reliance on imports and ease inflationary pressures.
2. Social Safety Nets: Expanding social welfare programs and improving the quality of education and healthcare can help alleviate some of the economic burdens on low-income households.
3. Investment in Infrastructure: There is a critical need for investment in transportation, energy, and digital infrastructure to boost productivity and reduce the cost of doing business in Nigeria.
4. Strengthening Governance and Combating Corruption: Addressing the deep-rooted issue of corruption and improving governance structures are essential to ensure that economic reforms are properly implemented and reach those in need.

Conclusion

While global inflation rates have shown signs of moderation, countries like Nigeria still grapple with severe economic challenges that have profound implications for the masses. There are promising efforts in place, but they are undermined by inconsistent policies, inadequate infrastructure, and external economic shocks. The path to economic stability and growth lies in bold, consistent, and people-centred policies that prioritise long-term sustainability and social equity.

It is crucial for Nigeria and other emerging economies to learn from global experiences, address internal inefficiencies, and focus on building a resilient and diversified economy that will shield the most vulnerable populations from the harsh realities of inflation.