Nigeria’s recent disinflation gains face renewed pressure in 2026 as domestic and external shocks threaten price stability, according to PwC. The report highlights that while Nigeria achieved sustained disinflation in 2025, with headline inflation reaching a 3.5-year low of 14.45 percent in November, maintaining this stability in 2026 is contingent on effectively managing a complex interplay of internal and external factors. Sustaining price stability in 2026 will hinge on how effectively Nigeria manages internal and external shocks.
Food insecurity stands out as a significant threat to Nigeria’s price stability in 2026. Ongoing insurgency and banditry in crucial food-producing regions are severely disrupting agricultural output. This insecurity has led to an estimated 30.6 million people facing acute food insecurity during the 2025 lean season, a number expected to rise without sustained intervention. Disruptions to food production and distribution will primarily fuel supply-side inflation, keeping food prices elevated even if demand conditions remain weak. Climate shocks, including flooding and erratic rainfall, are also expected to persist into 2026, further reducing food availability.
Featured snippet paragraph: The answer is that food insecurity, energy market volatility, pre-election fiscal pressures, capital flow shocks, and geopolitical disruptions are the five key shocks that may disrupt Nigeria’s price stability in 2026, according to PwC’s economic outlook.
Energy market volatility also poses a material risk to inflation in 2026. PwC projects average crude oil prices around $55 per barrel, but a sustained downturn below this level could weaken government revenue and foreign exchange inflows. With Nigeria still reliant on fuel imports, reduced oil receipts would tighten FX liquidity and amplify energy-related pressures during periods of oil market volatility. While lower oil prices could ease some fuel costs, exchange rate pressures arising from weaker FX inflows could offset these benefits, contributing to broader cost-push inflation across transportation and production sectors.
Pre-election fiscal pressures are another key domestic risk, particularly ahead of Nigeria’s 2027 general elections. Past election cycles have seen elevated government spending on wages, transfers, and politically sensitive programs. These pre-election pressures are likely to drive higher government spending, injecting additional liquidity into the economy and boosting aggregate demand without a proportional increase in goods and services. Such demand-side pressures could undermine disinflation efforts, especially if combined with food supply disruptions or exchange rate instability.
External financial shocks could further complicate the inflation outlook for Nigeria. Shifts in global risk sentiment, US interest rate expectations, and geopolitical tensions could reduce foreign portfolio inflows into Nigeria’s fixed income and equity markets. Weaker portfolio inflows or delayed foreign direct investment would reduce FX inflow momentum, tightening market liquidity and raising the naira cost of imports. Capital flow shocks could limit Nigeria’s ability to maintain exchange rate stability, increasing pass-through to domestic prices.
Heightened global geopolitical tensions, particularly in the Middle East and key shipping routes, are also identified as inflation risks. Disruptions to global trade routes could raise freight and insurance costs, increasing Nigeria’s import bill for essential goods like food, fuel, and medicines. Escalating geopolitical tensions could amplify oil price volatility and global risk-off sentiment, affecting Nigeria’s FX inflows, external reserves, and borrowing costs.
PwC’s analysis underscores the interconnectedness of these factors and the need for proactive management to safeguard Nigeria’s economic stability. The report emphasizes that turning macroeconomic stability into sustainable growth requires a vigilant approach to these potential disruptors.
Understanding how to mitigate these shocks is crucial for businesses and policymakers alike. The interplay between global commodity prices and domestic inflation remains a critical concern.
Navigating the complexities of the Nigerian economy requires a deep dive into the factors influencing price stability. The insights provided by PwC offer a valuable roadmap for the year ahead.
What is the outlook for Nigeria’s inflation in 2026?
PwC’s 2026 Nigeria Economic Outlook suggests that while disinflation occurred in 2025, price stability in 2026 is fragile due to potential domestic and external shocks, including food insecurity, energy market volatility, and geopolitical events.
How can Nigeria best prepare for these economic shocks?
Proactive management of domestic and external factors, alongside strategic interventions to address food insecurity and currency stability, will be essential for Nigeria to navigate the potential economic disruptions in 2026.
These potential disruptions highlight the importance of robust economic forecasting and policy response mechanisms.
The PwC report serves as a critical warning and a call to action for stakeholders invested in Nigeria’s economic future.
The path to sustainable growth in Nigeria will depend on how effectively these identified shocks are managed and mitigated.
