Analysts Warn of Fresh Price Pressures, Despite Inflation Easing

Despite a marginal easing in Nigeria’s headline inflation, analysts have warned that emerging cost pressures across key segments of the economy could stall the disinflation trend in the months ahead.

Data released by the National Bureau of Statistics showed that headline inflation moderated slightly to 15.06 per cent year-on-year in February 2026, from 15.10 per cent recorded in January, extending the disinflation streak to eleven consecutive months.

However, analysts say the outlook is becoming increasingly uncertain as month-on-month price pressures re-emerge, driven largely by food costs, energy prices, and seasonal demand factors. On month-on-month basis, consumer prices rose by 2.01 per cent, marking a sharp rebound from the 2.88 per cent contraction recorded in January. Also, food inflation edged higher by 323bps to 12.12 per cent, year on year in February from 8.89 per cent in January while month-on-month food inflation accelerated by 4.69 per cent.

Analysts at Quest Merchant Bank noted that while the annual slowdown suggests some stability, the 2.01 per cent month-on-month increase in February signals renewed inflationary momentum. According to them, the sharp rebound in food prices, which rose by 4.7 per cent month-on-month from a contraction of 6.0 per cent in January, reflects persistent supply-side disruptions, particularly in key agricultural regions affected by insecurity.

They warned that these pressures could intensify in the near term, especially as global energy market disruptions begin to filter into domestic prices.

“The ongoing geopolitical tensions in the Middle East have pushed crude oil prices higher, and this is expected to transmit into higher transportation and production costs locally,” the analysts stated, adding that the February data did not fully capture the impact of the late-month surge in global oil prices.

Similarly, analysts at Cordros Capital projected a further increase in inflationary pressures in March, citing a combination of rising fuel costs, festive demand associated with Eid al-Fitr, and tightening supply of farm produce.

The firm noted that the recent spike in global crude oil prices has already translated into higher domestic fuel prices, with petrol rising sharply and diesel costs also surging. This, they said, is expected to trigger second-round effects across transportation, food, and other consumer goods.

“Higher fuel costs are likely to elevate logistics and operational expenses, with a pass-through effect on food prices and broader inflation expectations,” Cordros stated, forecasting a 3.50 per cent month-on-month inflation rate in March.

They added that seasonal demand linked to the festive period would further compound price pressures, as households increase spending on food, clothing, and transportation.

On the supply side, Cordros highlighted that the approach of the peak planting season typically constrains the availability of farm produce, thereby exerting upward pressure on food prices.
In contrast, analysts at Cowry Asset Management maintained a relatively more optimistic outlook, pointing to improvements in foreign exchange stability and the lingering effects of the 2025 consumer price index rebasing as key factors supporting the disinflation trend.

They noted that February’s inflation reading represents the lowest level since late 2021, suggesting that macroeconomic stabilisation efforts are beginning to yield results. Nonetheless, Cowry acknowledged that underlying pressures persist, particularly from food prices and seasonal factors, which could lead to a modest uptick in inflation in the near term.

“We expect headline inflation to increase slightly to 15.24 per cent in March 2026, reflecting residual price pressures despite broader macroeconomic improvements,” the firm stated.