The World Bank has warned that the ongoing surge in global oil prices could directly add around 3.1 percentage points to Nigeria’s headline inflation, as higher fuel costs ripple through the economy.
The warning was contained in the Bank’s latest Nigeria Development Update, released Tuesday in Abuja, which highlighted a growing gap between locally refined petrol and imported fuel as a key driver of inflationary pressures in the downstream sector.
The report noted that imported petrol is currently about 12 per cent cheaper than fuel supplied by the Dangote Petroleum Refinery, reflecting distortions in domestic pricing amid rising global crude costs. “Dangote refinery—the main supplier of refined petrol after the regulator ceased issuing import licences in early 2026—raised the ex-depot price of Premium Motor Spirit to about N1,275 per litre as of March 23, 2026, compared to an estimated import-parity price of around N1,122 per litre,” the report said.
The World Bank cautioned that if oil prices rise to $80 per barrel—representing a 31.1 per cent increase relative to pre-conflict levels—the direct impact on headline inflation could be substantial, with indirect effects on transport, logistics, and food prices further amplifying the impact. Energy-related components account for roughly 10.1 per cent of Nigeria’s Consumer Price Index basket, making fuel price shocks quickly transmissible to broader consumer prices.
Speaking at the launch of the report in Abuja, World Bank Country Director for Nigeria, Mathew Verghis, noted that while Nigeria’s macroeconomic fundamentals had improved, global risks remain elevated. “Higher global energy prices and rising shipping costs are putting pressure on domestic prices… we are already seeing this in domestic fuel prices,” he said, noting sharp increases in petrol and near-doubling of diesel prices by the end of March.
Verghis emphasised that reducing inflation is critical to improving living standards, while also noting that higher oil prices could marginally benefit Nigeria’s fiscal and external balances as a net oil exporter. He stressed that structural measures—including easing trade barriers, improving supply chains, and providing targeted support for vulnerable households—would be key to mitigating price pressures.
On economic growth, Verghis said “real progress will require faster and sustained job-rich growth,” with energy, infrastructure, and fiscal reforms identified as top priorities. He also highlighted early childhood development as a cornerstone of long-term prosperity, warning that current outcomes should be treated as a crisis.
World Bank Lead Economist for Nigeria, Fiseha Haile, echoed concerns about rising energy costs feeding into broader inflationary pressures. “PMS prices have already increased by over 50 per cent since the start of the conflict… and this affects prices directly and indirectly,” Haile said, noting improvements in reserves, exchange rate stability, and the external sector despite global risks.
Minister of Finance and Coordinating Minister of the Economy, Wale Edun, said prior reforms have positioned Nigeria to absorb external shocks, with crude production at 1.4 million barrels per day and revenue collection systems strengthened. He stressed the importance of private sector investment to complement government efforts in reducing poverty.
Deputy Governor for Economic Policy at the Central Bank of Nigeria (CBN), Muhammad Abdullahi, reaffirmed the central bank’s commitment to macroeconomic stability, noting ongoing efforts to reduce headline inflation, which remains a significant burden on low-income households.
State-level officials and policy experts, including Gombe State Finance Commissioner Muhammad Magaji and Dr Osasuyi Dirisu of the Policy Innovation Centre, highlighted early childhood development as a structural priority essential for long-term productivity and national development, calling for coordinated national and subnational action plans.
