Nigeria’s declining inflation trend had been one of the more encouraging economic narratives across emerging markets over the past year.
After peaking above 33% in mid-2024, consumer prices fell steadily, declining for 12 consecutive months through February 2026 before reversing course in March.
The Central Bank of Nigeria had projected that average inflation could settle near 13% this year under its new targeting framework.
A major global ratings agency has now upended that optimism with a sweeping revision that carries implications for growth and monetary policy.
Households across Nigeria are already grappling with higher costs at fuel pumps, food markets, and public transport terminals as prices keep climbing.
The timing is notable, arriving just weeks after Nigeria secured its first sovereign credit upgrade from the same agency in over a decade.
What comes next for borrowing costs, consumer spending, and Nigeria’s broader reform credibility depends heavily on how these revised projections play out.
S&P Global raises Nigeria’s 2026 inflation forecast by 190 basis points
S&P Global raised its forecast for Nigeria’s average 2026 inflation rate to 16.9%, up sharply from a 15.0% projection issued in March.
The revision reflects what the agency described as stronger-than-expected transmission of higher global oil prices into domestic energy costs across the economy.
S&P Global also trimmed its 2026 GDP growth forecast for Nigeria by 30 basis points to 3.7% and cut its 2027 outlook to 3.5%.
Nigeria recorded the largest upward inflation revision among all key emerging-market economies in the EMEA region covered by the report, Nairametrics reported.
The agency flagged rising food inflation driven by higher transportation and fertilizer costs as an additional pressure point in the months ahead.
Higher consumer prices are expected to weaken household spending power, which remains a primary engine of Nigeria’s overall economic activity and growth trajectory.
Middle East energy shock drives the sharpest price pressure since 2025
The revised forecast arrives as Nigeria’s official inflation data confirms the worsening trend that S&P Global now expects to accelerate further.
Headline inflation climbed to 15.93% in May 2026, the third straight monthly increase after a year of steady declines, the National Bureau of Statistics reported.
That rebound reversed progress that had pulled annual inflation down from nearly 30% at the start of 2025 to 15.06% in February 2026.
Tele Adebajo, chief executive of CFG Advisory, warned that Nigeria’s inflation could accelerate toward 20% as fuel pass-through effects intensify across sectors.
He attributed the worsening outlook to fuel prices having surged by as much as 50% and aviation fuel climbing over 100%, CNBC Africa reported.
“If geopolitical tensions continue to ease and supply chain conditions improve, inflationary pressures could begin to moderate from the third quarter of 2026.” — Dr. Muda Yusuf, CEO, Centre for the Promotion of Private Enterprise, via The Guardian Nigeria
Dr. Muda Yusuf of the Centre for the Promotion of Private Enterprise identified geopolitical tensions as the primary external driver of recent price increases.
He noted that elevated crude prices, higher marine insurance costs, and shipping disruptions had combined to push domestic prices higher, The Guardian Nigeria reported.
Yusuf observed that month-on-month inflation moderated from 2.13% in April to 1.75% in May, suggesting the pace of price acceleration may be slowing.
S&P Global’s forecast breaches CBN’s central inflation target for 2026
The CBN had projected average inflation of 12.94% for 2026 in its macroeconomic outlook released in late December 2025, Premium Times reported.
The central bank set a central inflation target of 16.5% for 2026 with a tolerance band of plus or minus two percentage points, Bloomberg reported.
S&P Global’s 16.9% projection now exceeds the CBN’s central 2026 target of 16.5%, landing inside the tolerance band but signaling less room for rate cuts than policymakers had hoped.
The CBN reduced its monetary policy rate by 50 basis points to 26.5% at its last reported meeting after holding rates through most of 2025.
S&P Global’s revised outlook raises questions about whether another rate cut is feasible given the persistent upward pressure on prices across the economy.
Economist Chidi Nwanze noted that external shocks from the Middle East conflict are increasingly shaping Nigeria’s inflation alongside domestic structural pressures, the Nigerian Tribune reported.
Key figures from the S&P Global Q3 2026 emerging markets outlook
- Nigeria’s 2026 average inflation forecast: raised to 16.9% from 15.0% (S&P Global)
- 2026 GDP growth forecast: cut to 3.7% from 4.0% (S&P Global)
- 2027 GDP growth forecast: lowered to 3.5% from 3.8% (S&P Global)
- May 2026 headline inflation: 15.93% (National Bureau of Statistics)
- CBN’s 2026 central inflation target: 16.5% with ±2pp tolerance band (CBN macroeconomic outlook)
Revised inflation outlook tests Nigeria’s credit upgrade momentum
S&P Global upgraded Nigeria’s sovereign credit rating to ‘B’ from ‘B-’ with a stable outlook in May 2026, Daba Finance reported.
The upgrade reflected stronger oil production averaging 1.65 million barrels per day, improved fiscal revenue, and the Dangote refinery’s ongoing capacity ramp-up.
A significantly hotter inflation outlook now complicates the case for further credit improvements and raises fresh questions about monetary policy direction ahead.
Whether the CBN’s disinflation progress can extend into 2027 will depend on how quickly the oil-driven energy shock fades from Nigerian consumer prices.
