CBN Says Inflation Spike Temporary, Sees Return to Disinflation

With inflation rising for the second consecutive month due to the pass-through effect of the conflict in the Middle East, the Central Bank of Nigeria (CBN) has assured that the policy measures it has implemented have created sufficient buffers to enable the country return to the path of disinflation in the near term.

Speaking at the end of the 305th meeting of the Monetary Policy Committee (MPC) in Abuja on Tuesday, CBN Governor Olayemi Cardoso said the recent uptick in inflation over the past two months was largely driven by external shocks, but noted that the Nigerian economy remains well-positioned to absorb the impact.

Cardoso said, “We believe that what we have now is something that has resulted from external shocks. But notwithstanding that, we have been able to create buffers that have protected us during this period. Of course, the Standard & Poor’s upgrade is further testimony to the fact that we are clearly adopting policies that are taking us in the right direction.

“We will continue on that path. We will sustain the course. We have seen that as a result of adopting the right policies, we have consistently been on the path of disinflation. This, we believe, is temporary, and in due course we should go back to the trend we had embarked upon, largely due to the tools that we had adopted. So we will continue in that light.

“In addition to that, of course, it is key that the centrepiece of our toolkit, which is ensuring that the foreign exchange rate remains stable. That is something we are committed to ensuring, so that collaboration is strengthened and potential pass-through is minimised.”

The CBN governor explained that although headline inflation rose marginally for the second straight month to 15.69 per cent in April 2026 from 15.38 per cent in March, underlying indicators suggest that price pressures are beginning to moderate.

According to him, food inflation increased to 16.06 per cent in April from 14.31 per cent in March, reflecting elevated transportation and logistics costs, while core inflation eased to 15.86 per cent from 16.21 per cent.

He added that the 12-month average inflation rate declined to 19.16 per cent in April from 20.05 per cent in March, marking the sixth consecutive monthly decline. On a month-on-month basis, headline inflation slowed significantly to 2.13 per cent from 4.18 per cent, indicating moderation in both food and core components.

Cardoso also noted that Nigeria’s economic fundamentals remain resilient, with real Gross Domestic Product (GDP) expanding by 4.0 per cent in the fourth quarter of 2025, compared with 3.98 per cent in the preceding quarter.

He said growth was supported by stronger performance in the industrial and agricultural sectors, while the non-oil sector grew by 3.99 per cent year-on-year, driven by activities in information and communication, transportation and storage.

The oil sector also recorded improved performance, growing by 6.79 per cent in the fourth quarter of 2025 from 5.84 per cent in the previous quarter, on the back of increased refining activities in the downstream segment.

On the external sector, the CBN governor disclosed that gross external reserves rose to $49.49 billion as of May 15, 2026, from $48.35 billion at the end of March, enough to provide import cover for 9.04 months of goods and services. “This strong buffer continues to reinforce investor confidence in the Nigerian economy and support exchange rate stability,” he said.

Cardoso further observed that the global outlook remains uncertain, with growth expected to moderate in 2026 amid heightened geopolitical tensions, energy market disruptions and tighter financial conditions.

He noted that rising energy and agricultural commodity prices, alongside supply chain disruptions, are expected to push global inflation higher in the near term, prompting central banks across advanced and emerging economies to adopt a cautious, data-driven approach to monetary policy.

Despite these headwinds, the CBN governor maintained that Nigeria’s current policy stance will be sustained to preserve macroeconomic stability, anchor inflation expectations and ensure that the economy returns to a downward inflation trajectory.