Market News

by Sami Tunji and Arinze Nwafor

Nigeria’s inflation rate rose to 15.38 per cent in March 2026, reversing the recent easing trend as global shocks from the US–Iran conflict pushed up energy, transport, and food costs. The PUNCH observed that this is the first increase in headline inflation since March 2025.

Members of the Organised Private Sector raised concerns over the renewed surge in inflationary pressures. They warned that rising energy costs are impacting production, transportation, and distribution channels, with dire consequences for the cost-of-living in the country.

The uptick signals renewed pressure on household spending as rising global oil prices and supply disruptions filter into the domestic economy. The latest Consumer Price Index report released on Wednesday by the National Bureau of Statistics showed that headline inflation increased from 15.06 per cent in February 2026, indicating renewed pressure on household spending.

According to the report, “in March 2026, the Headline inflation rate rose to 15.38 per cent, up from 15.06 per cent in February 2026,” reflecting a 0.32 percentage point increase on a year-on-year basis.

The NBS noted that the Consumer Price Index rose to 135.4 points in March, up 5.4 points from 130.0 in February. On a month-on-month basis, inflation accelerated sharply, highlighting the pace of price increases within a short period.

The report stated that “the Headline inflation rate in March 2026 was 4.18 per cent, which was 2.17 per cent higher than the rate recorded in February 2026 (2.01 per cent).” This suggests that, while annual inflation remains below the 27.35 per cent recorded in March 2025, underlying price pressures are building again.

A breakdown of the drivers showed that food and non-alcoholic beverages remained the biggest contributor to inflation, accounting for 5.55 percentage points of the headline figure. Restaurants and accommodation services followed with 3.26 percentage points, while transport contributed 1.80 percentage points.

The data also revealed a divergence between urban and rural inflation trends. Urban inflation stood at 14.64 per cent year-on-year, while rural inflation was significantly higher at 17.22 per cent, showing stronger price pressures in rural areas.

Monthly, rural inflation surged to 6.73 per cent, up from 0.71 per cent in February, indicating a sharp spike in prices in rural communities. Food inflation remained elevated, continuing to exert pressure on households. The NBS said, “the Food inflation rate in March 2026 was 14.31 per cent on a year-on-year basis,” compared to 25.22 per cent in the same period of 2025.

This represents an increase from the 12.12 per cent recorded in February 2026, reinforcing the upward movement in food prices during the period. On a month-on-month basis, food inflation stood at 4.17 per cent, reflecting persistent increases in staple food items such as yams, cassava, tomatoes, and potatoes.

Core inflation, which excludes volatile agricultural produce and energy, rose to 16.21 per cent year-on-year, down from 27.12 per cent in March 2025. On a monthly basis, core inflation climbed to 4.03 per cent, indicating broader price increases beyond food.

The NBS further noted that the average inflation rate for the 12 months ending March 2026 stood at 20.05 per cent, higher than 18.58 per cent recorded in March 2025, suggesting sustained medium-term inflationary pressure.

OPS reacts

Private sector leaders, including the Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, said the latest figures signal a troubling reversal in the disinflation trend driven largely by energy costs.

“While recent months have reflected a gradual moderation in year-on-year inflation, the latest data signals a worrying resurgence of inflationary pressures, particularly on a month-on-month basis,” Yusuf said.

He added, “The recent uptick in inflation is largely reflective of renewed energy price pressures, which continue to permeate production, transportation and distribution costs across the economy.”

Yusuf explained that energy remains a critical cost driver due to reliance on diesel, petrol, and gas, noting that the impact is evident in higher transport fares, rising food prices, and escalating production expenses.

“The CPI data clearly shows that food and transportation-related costs remain the most significant contributors to inflation, accounting for about 70 per cent of inflationary pressures,” he said.

Recommending an off-ramp, the CPPE chief advocated significant investment in mass transit systems, including bus and rail networks, alongside regulatory frameworks to curb arbitrary fare increases and reduce reliance on fragmented private transport systems.

On monetary policy, Yusuf cautioned against further tightening, arguing that inflation is not being driven by excess liquidity. He said, “The current inflationary pressures are predominantly cost-push in nature… not excess demand,” warning that raising interest rates would be ineffective and could instead constrain investment and productivity in the real sector.

He added that “high interest rates would hurt economic growth, investment and productivity,” stressing that policy responses should shift away from narrow monetary tools to broader structural reforms targeting energy, food supply chains and transportation.

Similarly, the National Vice President of the National Association of Small-Scale Industrialists, Mr Segun Kuti-George, linked the inflation spike to global energy disruptions and their domestic ripple effects.

“The headline inflation is driven by the volatility in the world due to the ongoing war between the US, Israel, and Iran, leading to the blockade of the Strait of Hormuz, which supplies about 20 per cent of the world’s oil, and it’s driving the price of oil and energy up,” Kuti-George said.

He added, “We are now buying fuels at N1,250 on average from about N800 and N900. That looks almost like a 50 per cent increase, and it affects the prices of goods and services.”

Kuti-George noted that higher fuel costs have forced transport operators to raise fares, compounding inflationary pressures, while adverse weather conditions are constraining food production. “If supply is shorter than demand, that will naturally lead to inflation, and I think that the current weather is very hostile,” he noted.

On policy responses, he urged targeted agricultural interventions, stating, “If it has to do with the weather, the government can introduce irrigation, and if it has to do with fertilisers, they can make them more available and subsidise them.”

Also, the President of the Association of Small Business Owners of Nigeria, Dr Femi Egbesola, attributed the inflationary trend to exchange rate pressures, import dependence, and high energy costs. “When exchange rates depreciate, ultimately prices of goods and commodities will shoot up, which definitely will drive inflation,” Egbesola said.

He warned that Nigeria’s reliance on imports has left the economy vulnerable to global shocks. “Assuming we have enough to satisfy our local needs in terms of fuel and food, we would have been able to contain the inflation,” the ASBON chief remarked.

Egbesola called on the government to stabilise the foreign exchange market, reduce energy costs, and support local production. “It’s important now for the government to support those in agriculture and the agri-value chain and also manufacturers, so that we can look more inward rather than relying on global economies,” he said.

He further stressed the need for improved public transportation systems to ease cost pressures, adding that “businesses are closing day by day because of the pressures here and there, and that’s not good for us.”

The OPS members urged urgent government intervention in farming and mass transit, warning that failure to address structural bottlenecks in energy, food production, and transportation could deepen inflation and erode household incomes further.

Inflation in states

At the state level, inflation remained uneven. Bayelsa recorded the highest year-on-year inflation rate at 27.37 per cent, followed by Sokoto at 26.03 per cent and Bauchi at 23.67 per cent. In contrast, Osun recorded the slowest rise at 5.25 per cent, while Kano and Kaduna posted 9.85 per cent and 10.38 per cent, respectively.

On a month-on-month basis, Zamfara recorded the highest increase at 10.77 per cent, followed by Bauchi at 9.37 per cent and Sokoto at 9.05 per cent, while Lagos, Akwa Ibom, and Rivers recorded the slowest increases.

The report noted that variations across states reflect differences in consumption patterns, warning that direct comparisons may be misleading due to varying weights assigned to goods and services.

The World Bank earlier warned that the ongoing surge in global oil prices could directly add around 3.1 percentage points to Nigeria’s headline inflation, as rising fuel costs ripple through the economy.

“Overall, an increase in oil prices to about $80 per barrel… would directly add around 3.1 ppts to headline inflation under a full pass-through assumption,” the World Bank noted in its most recent Nigeria Development Update, adding that indirect effects from higher fuel costs on transport, logistics, and food prices could push inflation even higher.

However, Nigeria’s inflation rate increased by only 0.32 percentage points in March 2026, far below the World Bank’s projection.

Govt response

The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, warned that aggressive interest rate increases could weaken ongoing economic reforms in developing countries, including Nigeria, amid mounting global shocks.

“Premature or excessive interest rate hikes could undermine ongoing economic reforms, while delayed policy responses risk fuelling inflation,” Edun said during a G24 news conference held on the sidelines of the International Monetary Fund meeting in Washington, DC.

This was according to a press statement on Wednesday by the Head of the Information and Public Relations Unit at the Federal Ministry of Finance, Efe Ovuakporie.

Edun urged developing economies to adopt proactive strategies to cushion the effects of global economic disruptions, noting that central banks must strike a delicate balance in responding to inflationary pressures without stalling reform momentum.

He said, “Central banks in developing economies play a critical role in navigating challenges such as energy crises and geopolitical tensions,” stressing that policy responses differ across countries depending on their economic structures.

According to the minister, while oil-producing countries such as Nigeria may benefit from higher crude prices, oil-importing nations face rising import bills, though both categories continue to battle inflation driven by volatile energy markets.

He noted that even oil-exporting nations were not insulated from global shocks, citing rising costs of gas, fertiliser and food as key pressures affecting domestic economies.

Edun emphasised the need for resilience, urging governments to deploy fiscal buffers and implement targeted, temporary support measures for vulnerable populations rather than reversing ongoing reforms.

He cautioned against returning to subsidy regimes, stating that reforms such as fuel subsidy removal and foreign exchange liberalisation had strengthened Nigeria’s economic framework despite external shocks.

The minister added that governments must prioritise protecting vulnerable citizens from rising living costs without jeopardising long-term structural reforms critical for sustainable growth.

Edun further explained that favourable oil price movements could improve fiscal and external balances for exporting nations, creating room for responsible public investment, but warned that such gains must be managed with discipline.

He pointed to hedging strategies adopted by some countries to stabilise oil revenues, noting that such tools enhance predictability and support long-term fiscal planning in a volatile global environment.

The CBN cut the Monetary Policy Rate by 50 basis points to 26.5 per cent at its 304th Monetary Policy Committee meeting in February.

The rate cut followed a sustained decline in inflation, with the CBN noting that price pressures had moderated significantly after months of aggressive tightening.