April 8, 2026/Cordros Report
Nigeria’s headline inflation is poised to resume its upward trajectory in March 2026 amid re-emerging price pressures. This expectation is premised on several factors, such as rise in food prices, higher fuel prices and energy costs, mild depreciation in Naira, and a lower CPI in March 2025. Consequently, we review our forecast for inflation upwards to 15.40% y/y (previous: 14.62% y/y) and 4.20% m/m (previous: 3.50% m/m) for the month. This signals the end of recent price decline and raises concerns over a potential return to a period of high inflation pressures.
Drivers of Inflation Expectation for March 2026
Escalating tensions in the Middle East are delivering structural shocks to the Nigerian economy on both the demand and supply sides. Since the US-Iran conflict commenced, prices of goods and services have surged, signalling likely upward pressure on price levels. The month was dominated by elevated household food prices and rising energy costs, driven by heightened domestic supply constraints and increased demand during the fasting and festive seasons, which also coincide with the start of the planting season for major staple foods.
A broader analysis of anticipated movements in price levels and inflation estimates revealed a significant shift in the relationship with key inflation drivers. These nuances reflected emerging domestic and global realities in the month.
Soaring Food Prices
The seasonal increase in food prices associated with planting seasons persisted throughout the month, placing upward pressure on prices. As a result, key staples including beans, tomatoes, onions, yams, cereals, tubers, and rice recorded sharp increases. Given the significant weight of food in Nigeria’s CPI basket, these developments are expected to translate to a marked increase in headline and food inflation for the month.
Surge in fuel prices and other energy costs
The US-Iran crisis has driven an uptick in global energy prices. The Brent crude oil price increased by 45.8% to USD103.69/bbl, hitting a high of USD119.50/bbl in March, levels not seen since June 2022. Similarly, gas prices rose by 59.4% to USD17.91/mmbtu in the month as a spillover effect of the closure of the Strait of Hormuz and subsequent supply disruptions. The attendant impact has been an increase in domestic fuel costs in March 2026. For context, Dangote Refinery’s gantry PMS price increased to an average of NGN1,350.00/litre for PMS (previously: NGN1,051.47 in February 2026) and NGN1,750.00/litre for diesel (previously: NGN1,420.17 in February 2026). This has resulted in higher logistics costs and, consequently, increased food prices.
In the same vein, domestic gas prices adjusted significantly in the period. The price of Liquefied Petroleum Gas (LPG) increased to about NGN1,400/kg due to a 12.9% surge in the ex-depot price of 20 metric tonnes of LPG to NGN18.00 million. Further complicating the situation is the poor electricity supply during the period, which has forced many businesses and households to rely on alternative energy sources, such as generators or solar power, leading to increased operational costs and financial strain.
The aforementioned factors all highlight a heightened level of energy costs for businesses and households in the month.
Mild exchange rate volatility
In March 2026, the Nigerian naira showed moderate volatility in the official window. The exchange rate traded at an average of NGN1,380.82/USD, representing a 1.9% depreciation compared to February 2026’s average (NGN1,355.50/USD). FX demand pressure from importers, fuelled by global commodity price spikes and supply chain disruptions from the Strait of Hormuz closure, further drove the naira’s weakness.
This mild depreciation, via its pass-through to manufactured and industrial goods prices, explains the rising input costs in the CBN Purchasing Managers’ Index for March 2026.
Our Inflation Expectation for March 2026
Nigeria’s business and operating environment in the month is largely shaped by domestic drivers, amplified by emerging global factors, such as fluctuations in oil prices and changes in international trade dynamics. We expect headline inflation to rise from 15.06% in February 2026 to 15.40% y/y in March 2026, considering the factors highlighted above and the impact of a lower Consumer Price Index (CPI) base from March 2025 (117.3 points).
