Easing oil prices offer relief as Nigeria’s inflation pressures soften

Nigeria’s inflation outlook is showing signs of improvement, raising hopes of relief for households, as slowing monthly price increases and falling global oil prices point to a gradual moderation in consumer prices in the months ahead.

Inflation data released by the National Bureau of Statistics (NBS) showed that headline inflation on a month-on-month basis eased to 1.75 percent in May 2026 from 2.13 percent in April, indicating that the pace of consumer prices increased at a slower rate than they did the previous month.

Food inflation, which has the biggest impact on household spending, also moderated to 2.98 percent month-on-month from 3.63 percent in April.

However, on a year-on-year basis, May inflation rose to 15.93 percent from 15.69 percent in April, slightly higher than analysts had expected.

The slowdown comes as global energy markets respond positively after the US and Iran reached a deal to reopen the Strait of Hormuz, which has eased fears of prolonged disruptions in the Middle East and helped lower crude oil prices.

Brent crude fell more than 5 percent to $83 a barrel after the truce was announced.

Muda Yusuf, chief executive officer, Centre for the Promotion of Private Enterprise [CPPE], said the recent diplomatic breakthrough in the Middle East and the moderation of crude oil prices from about $90 per barrel to approximately $83 per barrel provide grounds for cautious optimism.

“If geopolitical tensions continue to ease and supply chain conditions improve, inflationary pressures could begin to moderate from the third quarter of 2026. For now, the inflation uptick appears to be more of an external shock phenomenon and domestic structural headwinds than a reflection of domestic macroeconomic instability,” he added.

The data also strengthens expectations that the Central Bank of Nigeria (CBN) may have room to begin considering interest rate reductions later this year.

The monetary policy authority has maintained a tight monetary stance over the past two years to combat inflation. However, with inflation now at 26.5 percent, Modupe Arinde, research analyst at Meristem Securities, said that, looking at the body language of the monetary policy committee over the past few months, they seem very cautious.

“Therefore, I think they might still take a hold stance in the next meeting,” she added.

Despite the improving outlook, significant risks remain.

Food prices continue to face pressure from insecurity across major agricultural regions. Attacks on farming communities, displacement of rural populations and disruptions to supply chains have reduced agricultural output and increased transportation costs.

CPPE noted that insecurity remains one of the most important structural drivers of inflation and warned that monetary policy alone cannot solve the problem.

The group argued that government efforts should focus on improving food security, strengthening transportation infrastructure, investing in mass transit systems and enhancing energy security to tackle the underlying causes of rising prices

African economies feel the inflation spillover

Nigeria is not alone in grappling with renewed inflationary pressures linked to higher energy and transportation costs. Across Africa, several economies recorded a pick-up in consumer prices during May as global uncertainties filtered through to domestic markets.

In Ethiopia, inflation accelerated to 13.4 percent in May from 11.7 percent in April, driven largely by rising food and non-alcoholic beverage prices.

Kenya’s inflation climbed to 6.7 percent from 5.6 percent, the highest level in more than two years, as higher fuel and transportation costs filtered through the economy.

Ghana also experienced a modest increase, with inflation rising to 3.7 percent in May from 3.4 percent in April, highlighting the broader impact of energy-related cost pressures on African economies.

The trend suggests that the inflationary effects of geopolitical tensions in the Middle East have extended well beyond oil-importing countries, affecting transportation networks, logistics costs and food supply chains across the continent.