Nigeria’s economy is sending mixed signals. On one hand, inflation eased to 15.39 percent in August, with food inflation slowing to 19.57 percent, raising hopes of an interest rate cut. On the other hand, petrol price has climbed to N1,360 per litre at the gantry and is nearing N1,500 at the pump, threatening to wipe out those gains and choke businesses.
Analysts warn energy costs, petrol price at N1,350/litre, and logistics costs could reverse gains in Q4
Consequently, businesses are feeling a troubling breeze. Just as the National Bureau of Statistics reports inflation cooling to 15.39 percent, petrol price is heading to N1,500 per litre, pushing up costs of production, logistics and powering generators.
According to NBS, headline inflation fell marginally to 15.39% in August from 15.43% in July, while food inflation dropped to 19.57% from 20.31%. Month-on-month, food price growth crashed to 1.02% from 5.56% — the slowest in 2026.
But at the same time, Dangote Refinery raised gantry price by N85 to N1,350/litre. With logistics and marketer margins, pump price in Lagos is N1,450, and in Abuja and northern states N1,480-N1,520.
Economists say the August data gives CBN a reason to hold rates and potentially cut in November. MPR has been at 27.5% for months.
““If inflation had stayed above 20%, rate cut was impossible. At 15.39%, a 50bps cut is now discussable, but fuel at N1,500 is a huge risk to core inflation,”_ says an Economist
READ ALSO:Inflation Ease Raises Hope For CBN’s Policy Shift For Cheaper Loans Ahead
While CBN watches core inflation, which includes energy and transport. N1,500 petrol directly feeds into that.
MAN says energy is 40% of production cost. Many factories run on diesel and petrol generators. At N1,500 petrol, cost of running small generators jumps. Combined with 32% borrowing cost, margins collapsing.
“We produce with diesel at N1,100 and petrol at N1,500, then borrow at 33%. How do you compete?” Manufacturer.
*2. SMEs & Logistics
Delivery businesses, POS operators, barbers, welders who use petrol generators are worst hit. Cost of moving goods from Mile 12 to markets up 25% in one week. Traders will pass it to consumers.
*3. Transport & Inflation
NBS data shows transport contributed 1.64 percentage points to inflation. Petrol at N1,500 means bus fares up, food transport from North to South more expensive. That could reverse food inflation gains from harvest.
*4. HOUSEHOLDS:*
Real wages still squeezed. 19.57% food inflation is lower but still high. If petrol pushes it back to 21%, purchasing power falls again.
Rate Cut Illusion
Even if CBN cuts MPR to 27%, banks will still lend at 29-31%. Lower rates will not help if your biggest cost is fuel. Businesses need both cheaper credit and cheaper energy.
For now, businesses are not celebrating 15.39% inflation. They are calculating how many litres they can afford to stay open.
