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Nigeria’s recent decline in headline inflation may offer a glimmer of hope, but experts warn that underlying price pressures remain stubbornly high, with the risk of reversal looming due to escalating global energy shocks.
According to the Centre for the Promotion of Private Enterprise (CPPE), February 2026’s Consumer Price Index (CPI) report showed headline inflation easing slightly to 15.06% year-on-year, down from 15.10% in January and sharply lower than 26.27% in February 2025. While this signals a continuation of disinflation trends driven by monetary tightening and macroeconomic stabilisation, analysts describe the progress as fragile.
On a month-on-month basis, inflation accelerated to 2.01%, with food inflation surging 4.69%, reversing the moderation recorded in previous months. CPPE highlights that, for households, particularly in urban areas, the cost of living remains under severe strain. “Disinflation does not mean lower prices; it only means prices are rising more slowly,” the policy brief notes.
Businesses are feeling the pinch as well. SMEs face elevated energy, logistics, and raw material costs amid weak consumer demand. Margins are tightening, profitability is declining, and consumer-facing enterprises are increasingly vulnerable.
The most pressing threat, according to CPPE, comes from geopolitical tensions in the Middle East. Conflicts involving Iran, Israel, and the United States have pushed crude oil prices above $100 per barrel, disrupting energy infrastructure and supply routes like the Strait of Hormuz.
For Nigeria, this translates directly into higher fuel and diesel prices, rising transportation costs, and increased production expenses across multiple sectors. Food prices are already under pressure as input and distribution costs climb.
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Structural weaknesses in Nigeria’s economy amplify these shocks. Heavy reliance on petrol and diesel for power generation, due to unreliable electricity supply, means that global energy price swings quickly feed through to domestic inflation. CPPE estimates that power unreliability imposes annual economic losses of ₦7 trillion to ₦10 trillion, with households and businesses spending over ₦3.7 trillion yearly on generators.
In response, CPPE urges urgent policy measures to cushion the impact.
Recommendations include expanding domestic refining capacity, supporting alternative energy adoption through tax waivers on solar equipment, and scaling up efficient public transport to reduce the cost of commuting. Improving electricity infrastructure remains the long-term solution to stabilize energy costs.
Monetary and fiscal authorities are also cautioned against premature policy easing. “Oil revenue windfalls should be managed prudently, with emphasis on strengthening foreign exchange reserves and supporting productive sectors,” CPPE CEO Dr. Muda Yusuf advised.
While Nigeria’s headline inflation shows signs of moderation, the combination of persistent domestic pressures and rising external energy shocks means that the gains are precarious. Coordinated, forward-looking policies are critical to safeguard citizens, support businesses, and maintain macroeconomic stability in an increasingly volatile global environment.
