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The Centre for the Promotion of Private Enterprise (CPPE) has warned that rising energy costs could reverse Nigeria’s recent disinflation gains, despite headline inflation easing to 14.63% in September 2026.
The policy think tank said the sharp acceleration in monthly energy inflation poses a threat to the broader decline in consumer prices, calling for measures to strengthen domestic energy resilience and reduce production and distribution costs.
The warning was contained in a CPPE’s policy brief on Nigeria’s September 2026 inflation report released by the National Bureau of Statistics (NBS).
According to the organisation, monthly energy inflation accelerated to 5.38% in September from 0.36% in August, an increase of 5.02 percentage points, while year-on-year energy inflation stood at 10.85%.
Energy costs threaten inflation outlook
The CPPE described the acceleration in monthly energy inflation as one of the most significant warning signals in the September inflation report, noting that energy is a critical input across almost every sector of the economy.
Higher petrol, diesel and gas prices increase transportation, distribution and production costs, with potential knock-on effects on food prices and core inflation.
The organisation linked the pressure to geopolitical tensions in the Middle East, which have heightened volatility in global petroleum markets and exposed Nigeria to external energy-price shocks.
While exchange rate stability can help moderate imported inflation, the CPPE said it cannot fully offset rising international energy costs.
It warned that sustained increases in energy prices could undermine the recent disinflationary trend, arguing that lasting price stability would require reducing the economy’s structural dependence on expensive and volatile energy sources.
- “The policy priority should therefore be to strengthen domestic energy resilience through reliable electricity supply, expansion of CNG infrastructure, greater adoption of electric mobility and improved domestic refining efficiency,” the brief said.
Headline inflation falls to 14.63%
The CPPE welcomed the decline in headline inflation to 14.63% in September from 15.39% in August, representing a decrease of 0.76 percentage points, or 76 basis points.
It said the moderation reinforces the disinflationary trend, supports macroeconomic stability and improves prospects for investment, monetary easing and economic recovery.
- Core inflation also eased to 12.95% from 13.29%, while monthly headline inflation declined to 0.06% from 0.71%.
- Monthly food inflation turned negative at 1.55%, offering some immediate relief to consumers, according to the organisation.
- The CPPE attributed part of the improvement to relative stability in the foreign exchange market, which has helped moderate imported inflation and improve business planning.
However, it cautioned that falling inflation does not necessarily mean that the overall cost of doing business is declining, particularly when energy and logistics costs remain elevated.
CPPE backs further interest rate cuts
The organisation said moderating inflation strengthens the case for further monetary easing, given the high cost of credit facing businesses across the economy.
It noted that elevated borrowing costs have constrained manufacturing, agriculture, construction, distributive trade and micro, small and medium-sized enterprises (MSMEs).
It urged policymakers to maintain a measured approach, balancing the need to reduce borrowing costs against inflation expectations, exchange rate conditions and emerging energy-price risks.
The organisation also flagged the increase in monthly core inflation to 1.11% in September from negative 0.06% in August, despite the decline in annual core inflation.
It said the divergence suggests that underlying price pressures have not been fully contained.
CPPE outlines policy priorities
To sustain the disinflationary trend and limit the risk posed by energy costs, the CPPE recommended several measures for policymakers.
These include maintaining prudent monetary easing while safeguarding foreign exchange stability and inflation expectations, and prioritising food affordability by addressing insecurity, agricultural productivity constraints, post-harvest losses and distribution costs.
It also called for accelerated electricity-sector reforms, expanded compressed natural gas and alternative energy infrastructure, and more competitive domestic petroleum markets to reduce energy costs.
Energy inflation in 2026
The year began with energy inflation at 11.17% in January before accelerating to 12.90% in February, its highest level in the first nine months of 2026.
- The rate subsequently moderated to 9.90% in March and declined further to 4.60% in April, before recovering slightly to 5.73% in May.
- Energy inflation climbed again to 9.90% in June but fell to 4.40% in July, its lowest reading during the period.
August recorded a marginal increase to 4.69%, before the rate more than doubled to 10.85% in September, marking the sharpest monthly acceleration in the annual inflation rate so far this year.
