Economic analysts at Afrinvest have called on the Federal Government to implement emergency fiscal interventions, including the suspension of tariffs on essential food items, to prevent a “material spike” in the cost of living following a volatile inflation reading for February 2026.
Despite a technical decline in the annual headline inflation rate, which has eased by four basis points to 15.06 per cent, underlying data reveals a brewing storm.
Monthly inflation spiked 2.0 per cent in February, a sharp reversal from the 2.9 per cent deflation recorded in January.
Experts warn that a combination of domestic “statistical smoothing” and the escalating Middle East crisis could see these gains evaporate.
The report highlights a “material spike” in retail energy prices driven by global crude oil surging toward $105 per barrel. In many states, the price of petrol has climbed to N1,350 per litre, while diesel and cooking gas have jumped to N1,650 per litre and N1,400 per kilogramme, respectively.
“This shock, coupled with subsisting structural drag factors, inadequate power supply, poor road network, and insecurity, is expected to stoke price pressure going forward,” the update noted.
Food inflation remains the primary pain point, rising 3.2 percentage points year-on-year to 12.1 per cent. Analysts attribute this to “seasonality shocks” from weak food supplies during the Ramadan and Lent fasting periods, as well as the cascading effect of high logistics costs.
In response, Afrinvest is urging the government to act decisively to protect low-income earners who are most vulnerable to these price swings.
“We recommend that the FG implement strategic interventions to cushion this shock on households by rolling out affordable country-wide mass transit, healthcare subsidies for the low-income bracket, and suspending tariffs and other related charges on importers of food and other essential items,” the analyst said.
Afrinvest’s base-case scenario now projects a 150-basis point increase in the year-on-year headline rate to 16.6 per cent in the coming months, with monthly readings potentially hitting 5.2 per cent.
“Should the external shock persist for more than a few months, the upbeat expectations of a lower average inflation rate of 16.5 per cent by the Federal Government… could be significantly derailed.”
As the National Bureau of Statistics continues its “statistical smoothing” exercise to rebase the Consumer Price Index, analysts expect monthly readings to normalise eventually, but only if the government can successfully mitigate the current energy and supply chain crises.
