Macroeconomic Report & Economic Updates

The Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC), at its 305th meeting held on 19–20 May 2026, retained the Monetary Policy Rate (MPR) at 26.5 percent. The Committee also maintained the asymmetric corridor around the MPR at +50/-450 basis points, while retaining the Cash Reserve Ratio (CRR) at 45.0 percent for Deposit Money Banks, 16.0 percent for Merchant Banks, and 75.0 percent for non-Treasury Single Account (non-TSA) public sector deposits.  The decision to maintain policy rates reflects the CBN’s cautious approach to balancing inflation control with broader macroeconomic stability objectives. By sustaining a tight monetary policy stance, the MPC aims to reinforce ongoing efforts to moderate inflationary pressures, stabilise the exchange rate, and manage liquidity conditions within the financial system. The decision also underscores persistent concerns regarding elevated inflation, despite the recent moderation in month-on-month price increases. However, high borrowing costs may continue to constrain private sector credit growth, investment, and business expansion, particularly among small and medium-sized enterprises.  To achieve more sustainable inflation control, monetary tightening should be complemented by fiscal and structural measures to address supply-side drivers of inflation, particularly food insecurity, logistics bottlenecks, and rising energy costs. The government should also prioritise policies that enhance productivity and support domestic production to sustainably ease inflationary pressures while minimising the adverse effects of high interest rates on economic growth, employment, and private-sector development.

The National Bureau of Statistics’ (NBS) LPG Price Watch shows that cooking gas prices increased in March 2026 for all cylinder sizes. The average retail price for refilling a 5kg cylinder rose by 12.60 percent month-on-month from ₦6,799.18 in February 2026 to ₦7,655.73 in March 2026, while also recording a 4.55 percent increase year-on-year. Similarly, the average retail price for refilling a 12.5kg cylinder increased by 15.62 percent month-on-month from ₦16,997.94 in February 2026 to ₦19,652.83 in March 2026, and by 6.48 percent year on-year. State-level analysis shows significant variation in prices. For the 5kg cylinder, Kaduna recorded the highest average retail price at ₦9,212.21, followed by Lagos and Taraba, while Bauchi recorded the lowest at ₦6,295.40. For the 12.5kg cylinder, Nasarawa recorded the highest average retail price at ₦23,418.12, followed by Kaduna and Akwa Ibom, while Bauchi again recorded the lowest at ₦15,738.50. Based on zonal analysis, the North-West recorded the highest average retail prices for both a 5kg and a 12.5kg cylinder sizes, while the South-South recorded the lowest for refilling a 5kg cylinder and the South-East recorded the lowest for refilling a 12.5kg cylinder. Given the increase in the price of cooking gas, this could further worsen the cost-of-living pressure on households given current economic conditions. Specifically, it could raise household living expenses, deepen energy poverty among vulnerable households, and encourage the use of harmful fuels such as charcoal and firewood, with negative consequences for public health, environmental sustainability, and overall household welfare. To address these challenges, the government should improve domestic gas supply, support local LPG production, invest in distribution infrastructure across the country, and provide social protection measures, particularly for vulnerable households

The National Bureau of Statistics’ Transport Fare Watch for March 2026 revealed that transport costs in Nigeria increased significantly across major categories, reflecting persistent inflationary and energy-related pressures. Intra-city bus fares rose by 14.86 percent month on month to ₦1,373.49, while intercity transport fares increased by 17.95 percent to ₦9,564.12. Airfares also increased by 2.33 percent to ₦157,224.05, while motorcycle (Okada) and water transport fares rose by 9.05 percent and 4.59 percent respectively. On a year-on year basis, transport costs recorded substantial increases, particularly for Okada fares, which rose by 57.37 percent, and intra-city bus transport, which increased by 41.33 percent. Regional analysis indicated that the South-West recorded the highest fares for intra-city bus and motorcycle transport, while the South-South recorded the highest water transport fares. The sustained rise in transport fares was driven largely by elevated fuel and energy costs, exchange-rate pressures affecting vehicle maintenance and aviation operations, and broader inflationary conditions in the economy. Rising transportation costs continue to increase household expenditure, weaken purchasing power, and intensify cost-of-living pressures, particularly for low-income households. In addition, higher intercity transport fares may further worsen food inflation by increasing logistics and distribution costs across supply chains. To moderate transport-driven inflation, the government should strengthen investment in affordable public transportation, rehabilitate critical road infrastructure, and accelerate the adoption of alternative-energy transport systems, such as compressed natural gas (CNG)-powered buses. Sustained exchange rate stability and measures aimed at easing fuel price pressures will also be essential for reducing transportation costs and supporting broader price stability.

According to foreign exchange market data from the Central Bank of Nigeria (CBN), the naira averaged ₦1,361.22 per US dollar in April 2026, representing a 1.3% month-on-month appreciation from ₦1,379.32 per US dollar recorded in March. This follows a period of depreciation linked to global geopolitical tensions, particularly the United States-Israeli/Iran war, which began at the end of February 2026. During that period, the naira weakened by 1.7%, falling from an average of ₦1,355.53 per US dollar in February to ₦1,379.32 per US dollar in March. The modest recovery in April coincided with a 1.7% decline in foreign reserves, from US $49.24 billion at the end of March to US $48.37 billion as of 29 April, suggesting that reserves may have been utilised to support the currency. While the recent exchange rate appreciation is a positive development, the sustainability of the naira’s strength will depend on consistent foreign exchange inflows and favourable macroeconomic conditions. To consolidate these gains, policymakers should prioritise measures aimed at strengthening foreign exchange supplies, particularly by enhancing export capacity and attracting stable capital inflows. This will require targeted investments in export-enabling infrastructure, including roads, ports, and storage facilities, alongside sustained support for domestic manufacturing. In addition, maintaining transparency in foreign exchange market operations and ensuring timely access to foreign currency will be critical to strengthening investor confidence and promoting market stability.

The International Monetary Fund (IMF) in their Global Outlook report for April has revised Nigeria’s 2026 real GDP growth forecast downward to 4.1 percent, from 4.4 percent in its January outlook, reflecting rising input costs, particularly fuel, fertiliser, and shipping, which are weighing on non-oil sector activity. This moderation comes despite some offset from stronger oil prices. The growth path shows relative stability, with output estimated at 4.0 percent in 2025 and projected at 4.1 percent in 2026 and 4.3 percent in 2027. Inflation, while expected to ease, remains elevated, estimated at 23.0 percent in 2025, then declining to 16.0 percent in 2026 and 15.9 percent in 2027. External balances appear positive, with the current account surplus estimated at 5.1 percent of GDP in 2025, rising to 5.8 percent in 2026 before moderating to 3.1 percent in 2027. These revisions reflect a more complex global environment shaped by ongoing geopolitical conflicts, including the Iran crisis, the Russia-Ukraine War, and the Israel-Hamas War, which continue to disrupt energy markets, global supply chains, and shipping routes. For Nigeria, the situation translates into higher imported inflation and cost pressures for production and distribution, particularly in the non-oil sectors. While higher oil prices provide some fiscal and external relief due to higher revenue for government, the asymmetry between oil gains and broader cost pressures limits the transmission of growth, reinforcing structural weaknesses and dampening domestic demand. Policy response should prioritise protecting the domestic economy from external shocks while improving supply-side efficiency. This includes scaling up investments in energy infrastructure, transport logistics, and local input production to reduce import dependence and drive the growth of Nigeria’s productive sector.