Energy Shocks Threaten Nigeria’s Fragile Inflation Gains
Nigeria’s nascent battle against inflation faces a fresh assault from global energy markets, despite a marginal dip in headline figures. Data for February 2026 shows inflation eased to 15.06% year-on-year, down from 15.10% in January. While this appears positive compared to the 26.27% recorded a year ago, the Centre for the Promotion of Private Enterprise (CPPE) warns that Middle East volatility could soon erase these improvements.
The relief for consumers is largely an illusion of statistics. Monthly figures paint a grimmer picture, with month-on-month inflation rising to 2.01% and food costs surging by 4.69%. This spike suggests that the cost of living continues to climb even as the “pace” of the increase slows. Households and small businesses remain under intense pressure as the price of basic survival outpaces stagnant income levels.
Global crude prices have breached the $100 per barrel mark following the escalating conflict between Israel, Iran, and the United States. For Nigeria, this is a double-edged sword. While oil revenues may rise, the domestic impact is purely inflationary. Higher global prices translate directly to more expensive petrol, diesel, and logistics, which in turn drive up the cost of every item moved by road.
Nigeria’s structural dependence on fossil fuels for power amplifies these external shocks. Unreliable electricity forces the economy to spend over N3.7-trillion annually on private generators. The CPPE estimates that the country loses up to N10-trillion each year due to power outages. This reliance creates a direct “pass-through” effect where a missile strike in the Middle East results in higher production costs in Lagos or Kano.
The CPPE argues that the current “disinflation” is fragile and driven mostly by high base effects and tight monetary policy. It does not yet signal a fundamental shift in the economy’s price dynamics. To protect the gains, the government must ensure a stable crude supply to local refineries, including the Dangote facility. Proximity sourcing is the only way to decouple domestic fuel prices from the volatile international shipping and insurance markets.
Long-term stability requires a shift away from diesel-led productivity. The CPPE has called for the removal of import duties on solar equipment and a renewed focus on the national grid. Without these structural fixes, Nigeria remains a hostage to global geopolitics. For now, policymakers must resist the urge to ease interest rates, as the looming energy shock requires a continued defensive stance.