Nigeria faces a rising inflation threat as global oil prices surge, the World Bank has warned. In its latest Nigeria Development Update, the institution projected that escalating fuel costs could directly add about 3.1 percentage points to the country’s headline inflation. The report cites the widening gap between locally refined petrol and cheaper imported fuel as a major driver of inflationary pressures in the downstream sector.
The bank highlighted that the Dangote Petroleum Refinery’s petrol, now the main domestic supply source, is roughly 12% more expensive than import-parity prices. With global crude prices soaring amid Middle East tensions, the cost differential is expected to ripple across the economy, pushing up transport, logistics, and food prices. Energy-related components already make up over 10% of Nigeria’s Consumer Price Index, making the population particularly sensitive to fuel price shocks.
Speaking at the report’s launch in Abuja, World Bank Country Director Mathew Verghis noted that while Nigeria’s macroeconomic fundamentals have improved since mid-2023, rising global risks threaten to undermine progress. “Higher global energy prices and shipping costs are putting pressure on domestic prices,” he said, citing sharp increases in petrol and diesel prices as early indicators of wider inflationary effects. Verghis stressed that reducing inflation remains critical to protecting household purchasing power.
Economists also pointed to the broader impact on Nigeria’s economy. World Bank Lead Economist Fiseha Haile warned that PMS prices have jumped over 50% since the Middle East conflict began, feeding into general price rises. Meanwhile, improvements in reserves, exchange rate stability, and revenue collection provide some buffer. However, continued vigilance is required to mitigate risks from global market volatility and inflation spillovers.
Government officials, including Finance Minister Wale Edun and CBN Deputy Governor Muhammad Abdullahi, affirmed Nigeria’s readiness to manage external shocks through reforms, increased crude production, and targeted social safety nets. Experts also highlighted early childhood development as a structural priority to secure long-term growth, emphasizing that addressing inflation and investing in foundational social sectors must go hand-in-hand for sustainable economic progress.
source: punch