Analysts: Single-digit inflation feasible despite Middle East crisis

Nigeria’s ambition to return to a single-digit inflation regime is still within reach, according to economic analysts, despite fresh global shocks triggered by the Middle East crisis and a slight uptick in domestic price pressures. Globally, inflation has been acknowledged as the biggest enemy of growth, the biggest enemy of the common man. Recent data […]

Nigeria’s ambition to return to a single-digit inflation regime is still within reach, according to economic analysts, despite fresh global shocks triggered by the Middle East crisis and a slight uptick in domestic price pressures.

Globally, inflation has been acknowledged as the biggest enemy of growth, the biggest enemy of the common man.

Recent data from the National Bureau of Statistics showed that headline inflation rose marginally to 15.38 percent in March 2026 from 15.06 percent in February. While the increase marks the first reversal in a 12-month downward trend, analysts say the broader trajectory still points toward disinflation, supported by ongoing structural and monetary reforms.

The March rise has largely been attributed to spillover effects from geopolitical tensions in the Middle East, which have pushed up global energy prices, increased shipping costs, and disrupted trade flows.

These pressures have filtered into domestic prices, particularly in energy, transportation, and food supply chains. However, analysts argue that Nigeria’s economy has demonstrated an increasing capacity to absorb such external shocks.

At the center of this resilience is the policy direction of the Central Bank of Nigeria under Governor Olayemi Cardoso. The apex bank has maintained a tight monetary stance alongside foreign exchange reforms aimed at stabilizing the naira and improving liquidity in the FX market.

Cardoso, speaking at the Spring Meetings of the International Monetary Fund and the World Bank in Washington, D.C., reaffirmed the bank’s commitment to price stability. He noted that while the Middle East crisis introduced new headwinds, the impact on Nigeria has been relatively contained compared to previous global shocks.

“We will stay the course in bringing inflation down to single digits,” Cardoso said, emphasizing that the bank remains focused on strengthening buffers and maintaining policy discipline.

Cardoso added: “We are not relenting on continuing to build resilience and also to stay the course with respect to something we have constantly been talking about, and that is bringing down inflation to single digits. In spite of all that is going on, we will stay that course.”

Analysts largely agree with this outlook, pointing to a combination of improved macroeconomic fundamentals and coordinated policy actions. They note that inflation, though slightly higher in March, remains significantly below the 27.35 percent recorded in the same period last year. This suggests that underlying pressures are easing, even if short-term volatility persists.

A key factor supporting the disinflation outlook is the relative stability in the foreign exchange market. Over the past year, reforms such as the adoption of a willing buyer-willing seller FX framework and the unification of exchange rates have reduced arbitrage opportunities and improved transparency. These measures have helped attract capital inflows and rebuild investor confidence.

In addition, the CBN’s efforts to boost dollar liquidity through diaspora remittances and licensing of new International Money Transfer Operators have strengthened external reserves. Nigeria currently receives an estimated $23 billion annually in remittances, with monthly inflows averaging about $600 million. Analysts say this steady source of foreign exchange is crucial in stabilizing the naira and moderating imported inflation.

The role of fiscal reforms has also been highlighted as a critical complement to monetary policy. The removal of petrol subsidies, though initially inflationary, has significantly reduced fiscal leakages and improved government finances. Analysts argue that over time, these savings can be redirected toward infrastructure and social investments, which could ease supply-side constraints and lower production costs.

President Bola Ahmed Tinubu has reiterated the government’s commitment to mitigating the impact of global shocks on households. This includes efforts to strengthen social safety nets and support key sectors affected by rising costs.

The International Monetary Fund has also endorsed Nigeria’s reform trajectory, noting that recent policy measures are beginning to yield tangible results. According to Abebe Selassie, exchange rate realignment, subsidy reforms, and tighter monetary policy have laid the groundwork for stronger growth and lower inflation.

However, he cautioned that the global environment remains uncertain. The Middle East conflict has introduced new risks, including higher commodity prices and tighter financial conditions. For oil-importing economies, this translates into increased costs of living, while oil exporters like Nigeria may benefit from higher revenues but remain vulnerable to price volatility.

Despite these uncertainties, analysts believe Nigeria is better positioned today than in previous years to navigate external shocks. Improvements in fiscal management, stronger reserve buffers, and a more credible monetary policy framework have enhanced the country’s economic resilience.

The International Monetary Fund (IMF) applauded Nigeria’s economic policies, saying the domestic reforms have brought visible results.

IMF Director, African Department, Abebe Selassie, disclosed this during the presentation of the Regional Economic Outlook for Sub-Saharan Africa, at the Annual meetings in Washington DC.

He said the effects of sound domestic policy choices instituted by the Nigeria fiscal and monetary authorities were increasingly visible.

Selassie disclosed that macroeconomic reforms and stabilization efforts, including strengthening of fiscal positions, created conditions for stronger growth and lower inflation.

He said that exchange rate realignments after foreign exchange market reforms, reductions in fuel subsidies, are some of the visible policies, and more recently, Nigeria began addressing long-standing macroeconomic imbalances, laying the foundations for growth.

He said: “Countries such as Nigeria have reaped the benefits of macroeconomic reforms, exchange rate realignments, subsidy reduction and strength in monetary policy frameworks. In short 2025 was a year of hard- won stabilisation gains, and policymakers across the region deserve credit for achieving them”.

Selassie said the war in the Middle East is a major new external shock, oil, gas and fertilizer prices have surged.

“Shipping costs have risen. Trade with Gulf partners has been disrupted. Tourism and emphasis are being squeezed. Financial conditions have heightened, particularly for fuel importing countries,” he said.

Selassie explained that the policy choices that are being made in the region at present, will continue to determine the continent’s economic future.

Economist Abiodun Adedipe points to several structural reforms that are beginning to yield results. These include foreign exchange market liberalization, banking sector recapitalisation, and ongoing tax reforms aimed at expanding government revenue.

He also highlights the importance of institutional initiatives such as the Nigerian Education Loan Fund, the Consumer Credit Corporation, and the recapitalized Bank of Agriculture in supporting inclusive growth. According to him, these measures can help stimulate demand, boost productivity, and ultimately contribute to price stability.

Continuing, Adedipe said the real game changer remains the tax reforms, capable of igniting regional competition (the secret behind Chinese economic renaissance) while the Nigerian Education Loan Fund, Consumer Credit Corporation, Recapitalized Bank of Agriculture, National Credit Guarantee Company Ltd, Single digit interest rate mortgage loans are major steps that should be taken to support sustainable economic growth.

Adedipe said that Nigeria’s economy is supported by a large, youthful and rapidly growing population (estimated at 237.53 million in July 2025 and sixth largest in the world, median age at 18.1 years).

The country, he said, also benefits from rapid urbanization with 54.28 per cent in December 2023, up from 46.12 per cent in 2013 and 51.96 per cent in 2020, deepening internet penetration which is at 48.15% in April 2025, up from 45.57 per cent in August 2023 and 31.48 per cent in December 2018.

Analysts further note that Nigeria’s demographic and structural advantages provide a strong foundation for long-term growth. With a large and youthful population, increasing urbanization, and rising internet penetration, the country has significant potential to expand its productive capacity. If harnessed effectively, these factors could ease supply constraints and reduce inflationary pressures over time.

Still, achieving single-digit inflation will require sustained policy discipline. Analysts warn that premature easing of monetary policy or fiscal slippages could reverse recent gains. They also emphasize the need for continued coordination between fiscal and monetary authorities to ensure that policy measures are mutually reinforcing.

In the near term, inflation may remain sensitive to external developments, particularly fluctuations in global oil and food prices. However, the consensus among analysts is that the current policy framework provides a credible pathway toward price stability.

 

Price of petrol rises by 22.55% in March – NBS

Meanwhile, the National Bureau of Statistics (NBS) has stated that the average retail price paid by consumers for Premium Motor Spirit (Petrol) for March 2026 was N1,288.54, indicating a 22.55 percent when compared to N1,051.47 paid for the commodity in February 2026.

A report by the bureau also stated that the March price saw a 2.13% increase compared to the value recorded in March 2025 (N1,261.65).

On State profile analysis, Anambra State had the highest average retail price for Premium Motor Spirit (Petrol), at N1,441.22. Sokoto and Borno States were next, with N1,377.55 and N1,375.16, respectively.

Conversely, Lagos, Ogun and Kaduna State had the lowest average retail prices  at N1,162.71, N1,169.78, and N1,193.40, respectively.

On the Zonal profile, the North-East Zone had the highest average retail price of N1,336.50, while the South West Zone had the lowest price of N1,232.46.

The report added that the average retail price of Automotive Gas Oil (Diesel) paid by consumers increased by 3.05 percent on a year-on-year basis from a lower cost of N1599.30 per liter recorded in the corresponding month of last year (i.e., March 2025) to a higher cost of N1648.08 per liter in March 2026.

“On a month-on-month basis, an increase of 16.05 percent was recorded from N1420.17 in February 2026 to an average of N1648.08 in March 2026. Looking at the variations in the State prices, the top three States with the highest average price of the product in March 2026 include Ebonyi State (N2262.29), Akwa Ibom State (N1895.72) and, Osun State (N1872.15).”

“Furthermore, the top three lowest prices were recorded in the following State namely, Kogi State (N1383.40), Katsina State (N1438.25), and Enugu State (N1480.06). The Zonal representation of the average price of Automotive Gas Oil (Diesel) shows that the South East Zone has the highest price of N1730.14, while the North Central Zone has the lowest price of N1593.11 compared to other Zones.”

Also, the average retail price for refilling a 5kg Cylinder of Liquefied Petroleum Gas (Cooking Gas) increased by 12.60 percent on a month-on-month basis from N6,799.18 recorded in February 2026 to N7,655.73 in March 2026.

It stated that on a year-on-year basis, ir increased by 4.55 percent from N7,322.49 in March 2025.

 

 

 

On state profile analysis, Kaduna recorded the highest average price for refilling a 5kg cylinder of Liquefied Petroleum Gas (cooking gas) with N9,212.21, followed by Lagos with N8,909.73 and Taraba with N8,802.78. On the other hand, Bauchi recorded the lowest price with N6,295.40, followed by Osun and Ondo with N6,457.35 aandN6,598.10 respectively.

 

 

 

“In addition, analysis by zone showed that the North-West recorded the highest average retail price for refilling a 5kg cylinder of Liquefied Petroleum Gas (cooking gas) with N8,137.81, followed by the North East with N7,890.53 while the South-South recorded the lowest with N7,300.95.”

 

 

 

“Also, the average retail price for refilling a 12.5kg Cylinder of Liquefied Petroleum Gas (Cooking Gas) increased by 15.62 percent on a month-on-month basis from N16,997.94 in February 2026 to N19,652.83 in March 2026. On a year-on-year basis, this increased by 6.48 percent from ₦18,456.24 in March 2025.”

 

 

 

On state profile analysis, Nasarawa recorded the highest average retail price for the refilling of a 12.5kg cylinder of Liquefied Petroleum Gas (cooking gas) with N23,418.12, followed by Kaduna with N23,030.52 and Akwa Ibom with N22,816.74.

 

 

 

Conversely, the lowest average price was recorded in Bauchi with N15,738.50, followed by Osun and Ondo with N16,143.38 and N16,495.25 respectively.