Despite signs of easing tensions in the U.S.-Iran conflict and a recent decline in global crude oil prices, economists warn that Nigerians may not experience immediate relief from rising living costs. Structural weaknesses within the economy, exchange rate instability, and persistent inflationary pressures are expected to keep prices elevated in the months ahead.
Brent crude oil, which surged above $125 per barrel in early April at the height of geopolitical tensions, has gradually retreated to around $101–$102 per barrel as diplomatic discussions between both countries continue. Under normal circumstances, lower oil prices could reduce fuel costs and ease inflationary pressure. However, analysts argue that Nigeria’s economic realities make such relief far from automatic.
Experts explain that prices in Nigeria are “downward sticky” — a situation where goods and services increase rapidly when costs rise but rarely decline at the same pace when those costs fall. As a result, even if crude oil prices continue to soften globally, businesses may still maintain current price levels across the economy.
The Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, noted that Nigeria’s highly unionized and structurally rigid market system plays a major role in sustaining inflation. According to him, many businesses are unwilling to lower prices once consumers have already adapted to higher costs, especially in markets where competition remains limited.
Yusuf explained that inflation in Nigeria is driven by more than just oil prices. He stressed that factors such as the weak naira, high transportation expenses, and expensive distribution networks continue to exert pressure on businesses and consumers alike. He also pointed to monopolistic tendencies in key sectors of the economy, where firms face little incentive to reduce prices even when operating conditions improve.
Development economist and Adeleke University professor, Tayo Bello, echoed similar concerns, emphasizing that Nigerians should not expect an immediate reduction in the cost of living simply because crude oil prices decline. According to him, years of persistent inflation have deeply shaped consumer and business expectations, making inflation psychologically and structurally embedded in the economy.
Economist Paul Olaleye of CashLinks added that businesses are battling multiple layers of operational costs beyond fuel prices alone. While petrol costs may fluctuate, firms still face rising energy bills, insecurity, logistics challenges, rent increases, and volatile exchange rates. He explained that many businesses now factor future cost increases into their current pricing models to protect themselves against uncertainty.
Financial economist Zakari Mohammed of Auchi Polytechnic also highlighted the hidden operational costs associated with reducing prices. He noted that businesses often incur expenses related to relabeling products, updating pricing systems, renegotiating supply contracts, and adjusting administrative processes whenever prices are lowered. Because of these costs, many firms prefer to avoid frequent price changes unless absolutely necessary.
Mohammed further explained that Nigeria’s large informal sector complicates price adjustments even more. Since pricing in informal markets is often arbitrary and less transparent, reductions in costs do not always translate into lower prices for consumers. Once consumers become accustomed to paying higher prices, businesses are generally less motivated to reduce them, particularly when demand remains relatively stable.
Although Nigeria’s inflation rate has moderated from nearly 35% in late 2024 to around 15% in early 2026, the overall cost of living remains painfully high for millions of households. Much of the earlier inflation surge was driven by fuel subsidy reforms, naira depreciation, and food supply disruptions, all of which continue to leave lasting effects on the economy.
The ongoing U.S.-Iran conflict has further worsened domestic pressures, with petrol prices rising from about N800 per litre earlier this year to nearly N1,300 per litre. The sharp increase in fuel prices has triggered another round of transport fare hikes and rising food prices, deepening the financial strain on households already struggling with weak purchasing power.
For many Nigerians, every wave of inflation leaves long-term scars because wages and incomes rarely increase at the same pace as consumer prices. This widening gap continues to erode living standards, especially among the country’s more than 140 million multidimensionally poor citizens.
Recent data from the Stanbic IBTC Bank Purchasing Managers’ Index (PMI) also reflects the pressure facing businesses. Although Nigeria’s private sector recorded expansion in April 2026, companies reportedly raised selling prices at the fastest pace in 16 months due to rising fuel and operational costs linked to global tensions. Output price inflation climbed to its highest level since December 2024, even as the headline PMI improved from 51.9 in March to 52.4 in April, marking the third consecutive month of business expansion.
Overall, analysts believe that unless Nigeria addresses deeper structural challenges such as exchange rate instability, weak market competition, insecurity, and high production costs, lower global oil prices alone may not be enough to significantly ease the hardship facing ordinary Nigerians.
