Nigeria’s fragile return to macroeconomic stability is facing fresh threats from surging global oil prices and rising pre-election political tensions, the Centre for the Promotion of Private Enterprise (CPPE) said in its first-quarter economic review.
While headline inflation eased to about 15.06 percent in February 2026, extending a steady moderation from levels above 24 percent in early 2025, the escalating crisis in the Middle East may halt the disinflationary trend, raising fresh concerns about the next policy direction of the monetary authorities, despite the naira holding firm.
The naira traded within a relatively narrow N1,340–N1,430 band in the official market during the quarter, while external reserves climbed above $50 billion, reflecting stronger oil earnings and improved foreign-exchange liquidity.
Read also: Nigeria unlocks N3.3trn to rescue power sector from decade of debt
The report described the period as “a transition towards relative macroeconomic stability—an essential foundation for restoring investor confidence and improving economic growth outlook”.
But the gains remain vulnerable.
“The current disinflation trajectory remains fragile and susceptible to reversal,” CPPE said, warning that crude prices have climbed above $100 per barrel amid escalating Middle East tensions.
While higher oil prices could boost export earnings and government revenue, the think tank cautioned that “the downside risks are immediate and far-reaching”, as fuel costs feed quickly into transportation, production and logistics expenses.
“This cost pass-through effect poses a significant threat to the fragile disinflation process, potentially reversing recent gains in price stability,” it added.
Economic growth has remained positive, with real GDP expanding 4.07 percent year-on-year in the fourth quarter of 2025, supported by oil-sector recovery and sustained non-oil activity. Still, CPPE warned that momentum could moderate in coming months amid elevated energy costs and weak consumer demand.
Read also: Nigeria’s health inflation surges on brain drain, high operating costs, import reliance
“Although food prices have shown some moderation, transportation and energy costs remain elevated, significantly eroding household purchasing power,” the group said, adding that the erosion of real incomes continues to damp demand across discretionary sectors.
Monetary policy may also face renewed strain when authorities meet next month. While the Central Bank of Nigeria cut its benchmark rate by 50 basis points to 26.5 percent in February, CPPE said “the scope for further monetary easing in the near term appears constrained by renewed inflationary pressures.”
Read also: Let our development touch every level – Tinubu
Political risks are rising as well, with the general election scheduled to hold in less than a year.
“Political realignments, defections, and early campaign positioning are already intensifying” ahead of the 2027 elections, CPPE noted, raising concerns that reform momentum that has well-positioned the country could slow.
The first quarter of 2026 represents “a significant inflection point” for Africa’s most populous economy, the group said. But sustaining stability may prove increasingly difficult if geopolitical tensions persist and domestic political pressures deepen.