Dare Babalola
The Centre for the Promotion of Private Enterprise has raised concerns over Nigeria’s inflation outlook, warning that recent gains in price stability remain fragile in the face of escalating global energy shocks and persistent domestic structural weaknesses.
In a policy brief released on Sunday, the Chief Executive Officer of the CPPE, Dr. Muda Yusuf, acknowledged a modest improvement in inflation figures for February 2026 but cautioned that the underlying pressures on households and businesses remain severe.
The February 2026 Consumer Price Index report showed a marginal easing of headline inflation to 15.06 percent year-on-year, down slightly from 15.10 percent recorded in January and significantly lower than the 26.27 percent reported in the same period last year.
The report suggests a continuing disinflation trend, supported by base effects, tighter monetary policy and some level of macroeconomic stability.
However, Yusuf cautioned that the improvement remains fragile and does not yet indicate a decisive turnaround in Nigeria’s price dynamics.
He maintained that despite the modest decline in annual inflation, underlying pressures remain intense.
“On a month-on-month basis, inflation accelerated to 2.01 percent, while food inflation rose sharply to 4.69 percent, reversing earlier signs of moderation. This trend underscores the persistent cost-of-living crisis confronting Nigerians, as rising food, transport and energy prices continue to erode purchasing power. Real incomes, particularly among vulnerable and urban households, remain under significant strain, with disinflation offering only a slower pace of price increases rather than an actual reduction in living costs.
“Businesses, especially small and medium-scale enterprises, are also grappling with a harsh operating environment. Elevated energy, logistics and raw material costs, combined with weak consumer demand, are squeezing profit margins and increasing vulnerability across key sectors. Consumer-facing businesses are particularly affected, as they struggle to balance rising costs with limited pricing flexibility.”
The CPPE identified escalating geopolitical tensions in the Middle East involving Iran, Israel and the United States as a major threat to Nigeria’s inflation outlook. The conflict has driven crude oil prices above 100 dollars per barrel, amid disruptions to energy infrastructure and concerns over global supply routes, particularly the Strait of Hormuz.
Yusuf warned that these developments are already transmitting into the Nigerian economy through higher petrol and diesel prices, increased transportation and logistics costs, rising production expenses and renewed pressure on the exchange rate.
The impact is further amplified by Nigeria’s structural vulnerabilities, notably its heavy dependence on petrol and diesel for power generation due to unreliable electricity supply.
According to the report, unreliable power costs the economy between ₦7 trillion and ₦10 trillion annually, while spending on generators exceeds ₦3.7 trillion each year. This dependence creates a direct and immediate link between global oil price shocks and domestic inflation, as higher energy costs quickly translate into increased production and transportation expenses.
To mitigate these risks, the CPPE called for urgent and coordinated policy actions to protect households and businesses while sustaining the fragile disinflation gains.
Yusuf emphasised the need to strengthen domestic refining capacity by ensuring stable and reliable crude oil supply to local refineries, including the Dangote Refinery, under predictable and supportive terms. This, he noted, would help moderate fuel prices, ease foreign exchange pressures and improve energy security.
He also urged governments at all levels to scale up investment in efficient and affordable public transportation systems, describing transport costs as a major driver of inflation.
In addition, the report recommended the removal of fiscal barriers to renewable energy adoption through waivers on import duties and taxes on solar equipment, inverters and batteries, to accelerate the transition to alternative energy sources and reduce reliance on costly fossil fuels.
The CPPE further advocated improvements in electricity supply as a long-term solution to Nigeria’s energy cost crisis, stressing the importance of strengthening generation, transmission and distribution infrastructure, alongside support for decentralized energy solutions.
In the short term, Yusuf suggested encouraging flexible and remote work arrangements to reduce commuting costs and ease the burden of rising fuel prices on households.
The report also advised monetary and fiscal authorities to remain cautious and disciplined, warning that premature policy easing could undermine recent gains.
It called for prudent management of any oil revenue windfalls, with a focus on strengthening foreign exchange reserves and supporting productive sectors of the economy.
While acknowledging the modest progress reflected in the February inflation figures, the CPPE warned that underlying price pressures remain strong and the external environment is becoming increasingly hostile.
Yusuf concluded that the current geopolitical energy shock poses a significant risk to Nigeria’s inflation outlook and could reverse recent gains if not addressed.
He stressed that a proactive, coordinated and forward-looking policy response is essential to safeguard macroeconomic stability, protect citizens and ensure business sustainability in an increasingly volatile global economy.
