S&P Global raises Nigeria’s 2026 inflation forecast to 16.9%

…cuts GDP outlook 

S&P Global has raised its forecast for Nigeria’s average inflation rate in 2026 to 16.9 percent from its earlier projection of 15.0 percent, citing stronger-than-expected pass-through from higher oil prices to domestic energy costs.

The global ratings agency also lowered Nigeria’s gross domestic product (GDP) growth forecasts for 2026 and 2027 by 30 basis points each to 3.7 percent and 3.5 percent, respectively, saying higher inflation is expected to weigh on household consumption, the country’s largest driver of economic activity.

The revised projections were contained in its latest report titled Economic Outlook Emerging Markets Q3 2026: Inflationary Pressures Will Persist.

S&P Global said inflationary pressures have intensified across emerging markets in Europe, the Middle East and Africa (EMEA), with Nigeria and Turkiye recording stronger energy inflation than previously expected.

“Compared with our March baseline, we have raised our inflation projections and lowered our growth forecasts for most EM economies in Europe, the Middle East, and Africa,” the agency said.

“Energy inflation has picked up broadly across the region, particularly in Nigeria and Turkiye. We expect food inflation to increase over the coming months due to higher transportation and fertilizer costs.”

According to the report, Nigeria recorded the largest upward revision to inflation among key emerging market economies in the EMEA region.

The latest projections come as Nigeria continues to post moderate economic growth while inflation remains on an upward trajectory.

Data from the National Bureau of Statistics (NBS) showed that the country’s economy expanded by 3.89 percent year-on-year in the first quarter of 2026, improving from 3.13 percent recorded in the corresponding period of 2025, driven largely by the services sector, agriculture and improved non-oil activities.

However, headline inflation rose to 15.93 percent in May 2026, up from 15.69 percent in April, marking the third consecutive monthly increase this year as higher food, transport and energy costs continued to exert pressure on household budgets.

S&P Global expects food inflation to rise further in the coming months as higher transportation and fertiliser costs continue to feed into consumer prices, adding to inflationary pressures already driven by energy costs.

The ratings agency also expects Nigeria’s monetary policy to remain tight, forecasting that the benchmark interest rate will stay at 26 percent through 2026. It projects the naira to end the year at about N1,451 per dollar.

Across the region, S&P revised growth and inflation forecasts for most emerging economies. Egypt was the notable exception, with stronger-than-expected growth and lower inflation prompting the agency to project GDP growth of 4.9 percent in 2026 and 4.3 percent in 2027.

For South Africa, the agency lowered GDP growth forecasts to 1.3 percent in 2026 and 1.5 percent in 2027 while raising its average inflation forecast to 4.3 percent.