Nigeria: Upper Single Digits Inflation Hinges On Sustained Naira Appreciation - Report

A report has projected that Nigeria's inflation rate could moderate to the upper single digits in 2026, provided the naira records sustained appreciation against the US dollar and current macro-economic reforms are maintained.

This projection is contained in the Proshare Economic Outlook Report 2026, titled, "Hope and the Politics of Economic Recovery in 2026", which examines global, African and domestic economic trends shaping growth prospects over the medium term.

The report situates Nigeria's outlook within a fragile global environment marked by shifting trade alliances, tighter monetary conditions and a gradual transition from multilateral trade frameworks to more fragmented bilateral arrangements. According to Proshare, this realignment is contributing to structurally higher global inflation and regionalised supply chains, while Africa is expected to post growth of between 4.1 per cent and 4.3 per cent in 2026, driven largely by mineral demand and new strategic partnerships.

Against this backdrop, the report noted that 2026 will be a critical pre-election year for Nigeria, one that will test the durability of recent economic reforms and shape the country's medium-term growth trajectory. Analysts observed that Nigeria is already showing early signs of recovery, supported by tighter monetary policy, exchange rate reforms and efforts to improve fiscal discipline.

It stated, "The domestic inflation rate in 2026 may decline to the upper single digits, but it will depend on the steady appreciation of the naira against the US dollar. If the naira-to-dollar exchange rate averages the 2026 budget expectation of N1,512 per US dollar, the CBN's 9 per cent single-digit inflation target would be impractical."

However, the report warned that heightened insecurity, political distractions, pre-election volatility and fiscal leakages remain significant risks. It urged the Tinubu administration to adopt a more data-driven and innovative policy approach, arguing that economic recovery would require "doing new things" rather than merely extending existing frameworks.

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