Fire in the Gulf, Heat in the Market

SYNC CAPITAL & ADVISORY LIMITED

Market Intelligence & Economic Insight

March 2026

How the Iran War, Rising Fuel Prices, and Nigeria’s Economy Shape Your Investment and Lending Decisions at Sync Capital

1. The Fire That Started in the Gulf

On the morning of 28 February 2026, the world woke up to a new geopolitical reality. The United States and Israel launched a coordinated military campaign against Iran — codenamed Operation Epic Fury — targeting Iranian leadership, military infrastructure, and nuclear facilities. What followed has been one of the most significant disruptions to global energy markets in modern history.

Nine days into the conflict, the cost of the first 100 hours of military operations alone was estimated at $3.7 billion by the Center for Strategic and International Studies — or roughly $891 million per day. Iran retaliated with drone and missile strikes across the Gulf, targeting Saudi Arabia, Qatar, Bahrain, and the UAE. More critically for global energy, Iran declared the Strait of Hormuz — the world’s most vital oil chokepoint — effectively closed to tanker traffic.

“The Strait of Hormuz remains effectively a parking lot, with tankers avoiding going through the critical waterway that accounts for 20% of global oil and LNG exports.” — Helima Croft, RBC Capital Markets

The Strait of Hormuz is the narrow passage between Iran and Oman through which roughly one-fifth of the world’s oil and 20% of global liquefied natural gas (LNG) normally flows. Within days of the conflict’s outbreak, at least five tankers had been attacked, approximately 150 ships were stranded, and shipping companies halted transits altogether.

2. Oil Prices on Fire: A Global Shock

Before the strikes, Brent crude — the global oil benchmark — was trading at around $70 per barrel. Within the first week of the conflict:

  • Brent crude surged by 10–13%, reaching the low $80s per barrel
  • U.S. crude (WTI) topped $90 per barrel — up from $67 before the war
  • Goldman Sachs estimated a risk premium of approximately $14 per barrel added to oil prices to compensate for the uncertainty
  • Analysts at JPMorgan warned that if the Strait of Hormuz remained fully disrupted for more than three weeks, Brent could hit $120 per barrel
  • European natural gas prices nearly doubled, following Iranian drone attacks on Qatar’s LNG facilities

The disruption is not merely speculative. Qatar, which alone accounts for about 20% of global LNG exports, shut down production after Iranian drone strikes hit key facilities. Saudi Arabia intercepted drones targeting its Shaybah oil field — one of the largest in the world. The conflict has already produced the first near-total halt to Strait of Hormuz shipping in modern history.

A prolonged war that keeps energy prices elevated could drive up global inflation by as much as 0.8 to 1.0 percentage points, according to analysts at Goldman Sachs, JPMorgan, and Chatham House.

3. Nigeria in the Crossfire: The Macro Environment

3.1 Nigeria as an Oil-Producing Nation — A Double-Edged Sword

Nigeria occupies a unique position in this crisis. As Africa’s largest oil producer, rising crude prices are, in theory, a windfall for the federal government. Nigeria’s 2026 budget was passed on a conservative oil benchmark of N64.85 per barrel. With Brent now trading well above $80, every additional dollar translates into billions of extra naira in monthly revenue.

The federal government’s deficit for 2026 stands at N23.85 trillion. A sustained oil price surge could theoretically narrow that gap, ease pressure on the naira, and fund capital projects. Yet the full benefit of this windfall is compromised by a persistent problem: Nigeria has consistently failed to meet its own production targets. In 2025, the government targeted 2.06 million barrels per day but averaged closer to 1.6 million, due to pipeline vandalism, oil theft, and chronic underinvestment in the sector.

3.2 The Inflation Time Bomb

For ordinary Nigerians, higher oil prices are not good news. Since President Bola Tinubu removed the petrol subsidy in May 2023 and deregulated the downstream sector, retail fuel prices are now directly tied to global crude prices. When oil goes up, the pump price goes up — without any buffer or cushion.

The consequences are already visible. Within 48 hours of the conflict’s outbreak, petrol prices in Nigeria jumped by approximately 13%, with pump prices rising from around N860 per litre to N970 per litre in some areas. Dangote Refinery raised its ex-depot price of diesel (AGO) by N170 per litre. Economists now project that petrol could hit N1,000 per litre or more by April 2026 if the war is not resolved.

“Without subsidies, any crude price increase will directly impact fuel prices at the pump. More revenue may come in, but we must remain cautious.” — Dayo Ayoade, Energy Law Expert, University of Lagos

This matters enormously for Nigeria’s broader economy. Transportation and food together dominate Nigeria’s consumer price basket. When petrol moves, virtually everything follows: transport fares rise, food distribution costs surge, manufacturing becomes more expensive, and the cost of running diesel generators — which power much of Nigeria’s business sector — escalates.

Nigeria had been making encouraging progress on inflation. By January 2026, the annual inflation rate had eased to 15.10% — the lowest level since November 2020, after ten consecutive months of decline. The Iran conflict threatens to undo those hard-won gains in a matter of weeks.

3.3 Currency and Financial Market Pressure

The naira has historically struggled during periods of oil price volatility, and the current crisis adds new layers of uncertainty. While higher oil prices could theoretically strengthen government revenues and support the naira, the inflationary pass-through effect, combined with global risk aversion and potential capital flight from emerging markets, may offset those benefits.

Global stock markets have already reacted: the Dow Jones fell over 400 points on 2 March, and Asian and European indices declined 1–2%. Nigeria’s equities and fixed income markets are not insulated from these global tremors. As central banks in advanced economies become more cautious about rate cuts — former U.S. Treasury Secretary Janet Yellen has warned that the Iran conflict puts the Federal Reserve “on hold” — the cost of external borrowing for Nigeria rises.

4. The Micro Environment: Businesses and Households Under Pressure

At the street level, the impact of the Iran war is not abstract — it is felt immediately in the daily decisions of businesses and households across Nigeria.

4.1 The Business Sector

For small and medium enterprises (SMEs), which form the backbone of Nigeria’s economy, the fuel price surge translates directly into higher operating costs. Manufacturers face rising energy costs, logistics companies are forced to increase haulage rates, and retailers must reprice goods even as purchasing power erodes. Cold chain operators, hospitals, and transport companies — all reliant on diesel — are seeing their cost structures upended.

As the Centre for the Promotion of Private Enterprise noted, “when petrol moves, almost everything else follows, from the cost of moving yams from Benue to Lagos, to the diesel bills for generators that keep small businesses alive.”

4.2 The Household Sector

For Nigerian households, the pressure is existential for many. A large proportion of household income goes to food and transportation. A 13% jump in fuel prices within 48 hours translates almost immediately into higher transport fares and higher food prices. Workers on fixed incomes, petty traders, and low-income earners bear the brunt. The modest economic relief many Nigerians had begun to feel in late 2025 and early 2026 risks being reversed.

4.3 The Credit Environment

When input costs rise sharply, businesses that relied on projected cash flows to service loans face liquidity stress. Borrowers who took on obligations based on pre-crisis projections may find their margins squeezed. This elevates credit risk across the lending sector, particularly for loans extended to transport businesses, food vendors, manufacturers, and general retail — sectors directly exposed to fuel price movements.

At the same time, inflation reduces the real value of returns on fixed-income investments for savers, unless rates are adjusted accordingly. In an environment of rising prices, Nigerians who leave money idle in low-yield savings accounts effectively lose purchasing power.

5. What This Means for Sync Capital & Advisory Limited

At Sync Capital, our core business model sits at the intersection of two critical financial needs: we accept fixed-tenored investments for a minimum of 90 days, and we extend loans to individuals and businesses. Both sides of our balance sheet are affected by what is unfolding in the Gulf, and understanding this gives us both responsibility and opportunity.

5.1 Our Investment Products: A Safe Harbour in a Stormy Economy

The Iran conflict and its downstream effects on Nigeria’s inflation rate create a compelling case for Nigerians to move money out of idle savings and into structured, fixed-tenored investments.

Here is why: when inflation rises — as it is now projected to do, potentially reversing the gains of 2025 — money sitting in ordinary bank accounts earning below-inflation returns is effectively shrinking in value. Every naira that earns a return below the inflation rate represents a loss in purchasing power for the saver.

Sync Finance’s fixed-tenored investment products, with a minimum tenor of 90 days, offer Nigerians a disciplined vehicle to put their money to work at rates that can protect and grow real value. In a volatile macroeconomic environment driven by external shocks like the current war, the predictability and structure of a fixed-tenor investment is especially valuable — it removes the temptation to make reactive, emotionally driven financial decisions, and it locks in returns over a defined period.

For our investors, this is the season to act. When the economy is under pressure, having your money in a structured, yield-generating instrument is not just smart — it is a form of economic self-defence.

5.2 Our Lending Operations: Vigilance, Selectivity, and Opportunity

On the lending side, the current environment demands heightened vigilance. Rising fuel prices increase operational costs for businesses across virtually every sector. Borrowers in transport, food supply chains, and manufacturing face compressed margins. As lenders, we must factor the current macroeconomic reality into our credit assessments.

This means:

  • Reviewing the fuel-cost exposure of borrowers in energy-intensive sectors
  • Stress-testing repayment capacity against projected fuel price scenarios (including the N1,000 per litre possibility flagged by economists)
  • Maintaining prudent loan-to-value ratios and ensuring adequate collateral or guarantees
  • Being attentive to signs of cash flow stress in existing loan portfolios

At the same time, there is opportunity. Not every business suffers in an inflationary environment. Some sectors benefit — traders in essential goods, foreign exchange earners, and businesses serving Nigeria’s oil revenue beneficiaries may see increased activity. Sync Finance can be a trusted financing partner for businesses that are well-positioned in the current environment, offering timely credit at competitive terms.

5.3 Interest Rate Environment and Pricing Discipline

Globally, central banks are reconsidering rate cuts in light of the Iran conflict. In Nigeria, the Central Bank of Nigeria (CBN) faces a difficult balancing act: higher inflation from fuel prices may push for rate increases, but the need to support economic activity argues for caution. Whatever direction policy rates move, Sync Finance must ensure that our investment rates remain competitive and our lending rates adequately price the risk of the current environment.

Our 90-day minimum tenor on investments is especially well-suited to the current moment. It is short enough to allow investors to reassess at relatively frequent intervals if the macro situation changes significantly, yet long enough to generate meaningful, compounding returns.

6. Conclusion: Stability in Uncertain Times

The war in Iran is not a distant event. Through the global oil market, through Nigeria’s deregulated fuel sector, through inflation, and through the cost of doing business and living in this country, it has arrived on every Nigerian’s doorstep. The question is not whether it will affect us — it already has. The question is how we respond.

For Sync Capital & Advisory Limited, our response is clarity of purpose: to be a reliable financial partner to our clients in both calm and turbulent waters. We offer investors a structured, disciplined vehicle to grow and protect their wealth when inflation threatens to erode it. We offer borrowers access to capital with the understanding that good lending is as much about helping our clients succeed as it is about managing our own risk.

The global storm that began in the Persian Gulf will test Nigeria’s economy in the weeks and months ahead. Sync Capital stands ready — grounded in financial discipline, guided by market intelligence, and committed to delivering value to every person who trusts us with their money or their ambitions.

Invest with Sync Capital. Because in uncertain times, structure, discipline, and the right financial partner make all the difference.

— Sync Capital & Advisory Limited | Fixed-Tenored Investments | Business & Personal Loans | Minimum Investment Tenor: 90 Days

This article is prepared for informational and marketing purposes. All economic data referenced is sourced from publicly available reports as of March 2026.

CBN Cuts 1-Year Treasury Bill Rate by 138bps, Rejects Bids

The Central Bank of Nigeria (CBN) cut the spot rate on its one-year tenor treasury bills by 138 basis points to 16.98% at the primary market auction on Wednesday.

At the auction, the authority offered Treasury bills worth N1.15 trillion for investors’ subscription across standard tenors. Demand was strong, with investors showing interest in long tenors amid rising appetite for duration.

The CBN underwrote its offer with total sales settling at N952.6 billion amidst spot rates repricing.  Details from the main auction indicate that the total subscription printed at N4.586 trillion, and 96% of the aggregate bids was driven by investors showing interest in one-year bills.

Investors submitted N66 billion bids for 91 days Treasury bills, which was below N150 billion offered by the authority.  The CBN allotted N63.21 billion for the short tenor to investors at the old rate.

Subscriptions for 182 days bills came in at N123 billion, though offer size was N200 billion. The authority sold 182 days bill worth N80.61 billion, and maintained its discount rate.

Reflecting a strong appetite for long duration, investors chased N800 billion worth of Nigerian Treasury bills with one-year tenor, with N4.396 trillion in total subscription. The authority allotted N808.78 billion to investors at a lower rate.

The authority took advantage of higher subscription for 1-year bills, and cut the spot rate to 16.98% on Wednesday from 18.36% at the previous auction.

Discount rates on 91 days Treasury bills and 182 days short term investment securities were kept unchanged at 15.84% and 16.65%, respectively.After Spot Rates Hike, DMO Reopens 7, 10-Year Bonds for Sale

Why the CBN Should Cut Rates by 100 Basis Points at the September 2025 MPC Meeting

Executive Summary

The Central Bank of Nigeria’s Monetary Policy Committee (MPC) meets again on September 22–23, 2025. With inflation easing for four consecutive months, reserves at a 44-month high, exchange rates stabilizing, and credit to the private sector softening under tight financial conditions, the case for a calibrated rate cut is compelling. A 100 basis point reduction in the Monetary Policy Rate (MPR) from 27.50% to 26.50%, would balance the objectives of supporting growth, preserving disinflation momentum, and maintaining investor confidence.

This paper argues that the MPC has entered a window of opportunity to begin a cautious policy pivot. Nigeria’s macroeconomic landscape has shifted in meaningful ways: inflation pressures are moderating, the exchange rate is more stable, and foreign reserves are stronger. At the same time, domestic credit conditions are tightening to the point of constraining businesses. A measured rate cut would therefore be both timely and justified.

1.  Disinflation Is Gaining Traction

1.1  Headline Inflation Trend

Nigeria’s headline inflation has steadily declined:

  • April 2025: 97%
  • May 2025: 41%
  • June 2025: 22%
  • July 2025: 88% (fourth consecutive monthly decline)

This disinflation trend is significant because it suggests that earlier policy tightening is working. Inflation has dropped by more than 11 percentage points year-on-year from 33.40% in July 2024. This is not a small achievement, it represents a rare period of consistent price moderation in Nigeria’s recent economic history.

1.2  Why This Matters

Disinflation is important because it provides breathing room for businesses and households. For companies, lower inflation means reduced costs for inputs, easier planning for budgets, and better predictability for investment decisions. For households, it means improved purchasing power, particularly for essential goods like food and energy. Sustained disinflation also strengthens consumer confidence, which in turn supports aggregate demand.

1.3  Real Interest Rate Dynamics

With MPR at 27.50%, the ex-post real policy rate is +5.6%, one of the highest among frontier and emerging markets. Real rates this high can suppress productive investment because borrowing becomes excessively expensive. Even after a 100 bps cut, Nigeria would maintain one of the tightest monetary stances in Africa, ensuring that inflation expectations remain anchored.

2.  External Buffers Are Stronger

2.1  Reserves at Multi-Year Highs

One of the major constraints on monetary easing in the past was the fragility of external buffers. That picture has changed dramatically in recent months:

  • Foreign reserves have risen above $41 billion, the highest level in nearly four
  • This rise has been supported by steady oil receipts, improved remittance inflows, and stronger capital inflows.

Higher reserves matter because they provide the CBN with ammunition to intervene in the FX market if pressures resurface. They also boost investor confidence, signaling that the country has the financial strength to manage external shocks.

2.2  Exchange Rate Stability

The naira has held steady in the official NFEM market around ₦1,526 – ₦1,533 per USD into early September, compared to periods of heightened volatility earlier in 2025. Exchange rate stability reduces the risk of imported inflation and creates a more predictable environment for businesses engaged in international trade.

2.3  Implications for Policy

These developments mean that the external position is sufficiently resilient to absorb a cautious easing of monetary policy. Cutting rates modestly will not necessarily weaken the naira or trigger destabilizing capital outflows, especially given the recent sovereign rating upgrade and positive investor sentiment.

3.  Domestic Activity and Credit Dynamics

3.1  Stronger Business Activity

Economic activity is showing signs of revival. The August private-sector Purchasing Managers’ Index (PMI) crossed 54, with new orders at a 19-month high. This is a leading indicator of economic expansion.

What is the PMI?

The PMI is a survey-based economic indicator that captures the health of the business environment. It asks purchasing managers about new orders, output, employment, supplier delivery times, and inventories. A PMI reading:

  • Above 50 → signals expansion in business
  • Below 50 → signals

Nigeria’s PMI has been consistently above 50 since April 2025, showing that businesses are expanding. The upward trend — from 50.5 in April to 54.2 in August — suggests growing confidence in demand and a strengthening recovery.

Why the PMI Matters

PMI is widely regarded as a leading indicator. It provides an early glimpse into how the economy is performing before official GDP data becomes available. Policymakers and investors track it closely because it reflects real-time business sentiment.

In Nigeria’s case, the recent PMI readings suggest:

  • Improving domestic demand, as firms report stronger new
  • Rising employment potential, as businesses prepare to expand
  • Confidence in price stability, as inflation pressures ease, allowing firms to plan

3.2  Tight Credit Conditions

Despite stronger PMI readings, the credit environment remains tight:

  • Bank lending to the private sector has softened in recent
  • High nominal interest rates and elevated cash reserve requirements (CRR at 50%) have constrained banks’ ability to extend credit.
  • Many SMEs face prohibitively high borrowing costs, which stifles expansion and job

A 100 bps reduction in the MPR would not completely solve this problem, but it would help ease conditions. It would also send a clear signal to lenders that monetary policy is beginning to normalize in response to improved fundamentals.

4.  Policy Continuity and Market Confidence

4.1  MPC Forward Guidance

The July MPC decision to hold the MPR at 27.50% was framed as conditional on evidence of sustained disinflation. That condition has now been met with the July CPI print, giving the MPC room to adjust policy.

4.2  External Validation

The credibility of Nigeria’s macroeconomic framework has been reinforced by external validation:

  • Moody’s upgraded Nigeria’s sovereign rating to B3 in May 2025, citing improved fiscal discipline and stronger external balance.
  • International market participants are increasingly acknowledging Nigeria’s improved reserve position and FX market management.

4.3  Investor Sentiment

Global investors typically interpret a measured rate cut in the context of strong fundamentals as a sign of confidence rather than weakness. By communicating clearly that easing is

conditional and reversible, the MPC can reassure investors while supporting domestic growth.

5.  Risks and Mitigation

5.1  Food Inflation Pressures

Food inflation remains vulnerable to supply shocks, insecurity, and weather patterns. However, these are largely structural rather than monetary in nature. Monetary tightening alone cannot resolve these issues. Instead, targeted government policies on agriculture and security are required. The CBN can manage short-term liquidity risks through Open Market Operations and by maintaining a high CRR.

5.2  Global Risks

Global risks such as dollar strength, shifting oil prices, or tightening by the U.S. Federal Reserve may put pressure on emerging market currencies. In such a scenario, the CBN’s asymmetric corridor (+500/-100 bps) and other liquidity tools provide room for quick corrective action.

5.3  Communication Strategy

A critical part of risk management is communication. The CBN must emphasize that any easing will be data-dependent. Should inflationary or FX pressures re-emerge, the MPC retains the tools and willingness to reverse course.

6.  Why a 100 bps Cut — and Not More or Less?

A 100 basis point cut strikes the right balance for several reasons:

  • Cutting less (e.g., 25–50 bps) may not meaningfully ease credit conditions or send a strong enough signal of policy recalibration.
  • Cutting more (e.g., 200 bps) could risk being interpreted as premature or overly aggressive, especially given residual risks around food inflation and global financial

At 26.50%, Nigeria’s policy rate would remain one of the highest in Africa, firmly positive in real terms, and still restrictive enough to sustain disinflation.

7.  Broader Implications for the Economy

7.1  Support for SMEs and Manufacturing

Small and medium enterprises (SMEs) are the backbone of Nigeria’s economy, contributing significantly to employment. By modestly reducing borrowing costs, the CBN would help SMEs secure working capital loans, expand operations, and create jobs.

7.2  Improved Consumer Sentiment

Lower inflation combined with slightly lower interest rates will support consumer spending. When households feel more confident about prices and job stability, they are more likely to spend, further driving economic recovery.

7.3  Fiscal-Monetary Coordination

A rate cut would also align with ongoing fiscal efforts to stimulate growth through infrastructure spending and targeted subsidies. This coordination between monetary and fiscal policy strengthens the overall policy mix.

Conclusion: A Case for a Measured Cut

A 100 bps rate cut to 26.50% strikes the right balance. It preserves Nigeria’s positive real rates, acknowledges progress on inflation and FX stability, and provides targeted relief to businesses struggling under high borrowing costs. By pairing this move with continued tight liquidity management, the CBN can reinforce its credibility while supporting sustainable growth.

The September MPC meeting presents a timely opportunity for the Central Bank to pivot cautiously but decisively, towards a more balanced monetary stance.

This article is intended for Medium and corporate blog audiences, blending technical rigor with accessible explanations to help readers understand the rationale behind a potential MPC rate cut.

Nigeria’s Inflation Moderates to 21.88% in July 2025 — NBS

The latest inflation report from the National Bureau of Statistics (NBS) shows that Nigeria’s headline inflation eased to 21.88% in July 2025, down slightly from 22.22% in June. This represents a significant 11.52 percentage-point decline from the 33.40% recorded in July 2024, partly reflecting the rebasing of the Consumer Price Index to November 2009 = 100.

On a month-on-month basis, however, inflation accelerated to 1.99% in July, up from 1.68% in June, signalling that while the annual rate has moderated, price pressures remain elevated at the consumer level. The 12-month average inflation rate fell to 25.65%, compared to 30.76% over the same period in 2024.

Urban vs Rural Dynamics

  • Urban inflation slowed to 22.01% year-on-year (July 2025), from 35.77% a year earlier, with the monthly reading declining to 1.86% (vs. 2.11% in June). The urban 12-month average stood at 27.04%, also down from 32.89% in 2024.
  • Rural inflation printed at 21.08% year-on-year, down from 31.26% in July 2024. However, rural price pressures were more acute on a monthly basis, with inflation rising sharply to 2.30% in July, from just 0.63% in June. The 12-month average rural inflation eased to 23.84%, compared to 28.86% in July 2024.

Food Prices — Still the Key Driver

Food inflation, the most sensitive component to household welfare, eased substantially to 22.74% year-on-year in July, compared to 39.53% in July 2024. Month-on-month, food inflation moderated slightly to 3.12% from 3.25% in June.
According to the NBS, the downward trend was supported by softer prices for vegetable oil, white beans, local rice, maize flour, guinea corn, wheat flour, and millet. The 12-month average food inflation dropped to 26.97%, from 36.36% in the prior year.

Core Inflation — Energy and Imported Pressures Ease

Core inflation, which strips out volatile agricultural and energy prices, slowed to 21.33% year-on-year in July, compared to 27.47% in July 2024. On a monthly basis, core inflation fell markedly to 0.97% in July, down from 2.46% in June. The 12-month average core inflation eased marginally to 23.63%, from 24.65% a year earlier.

Outlook and Policy Considerations

The data suggests that improved domestic food supply, relative exchange rate stability, and moderation in energy costs are beginning to filter through to consumer prices. Analysts note that the ongoing harvest season for staples such as maize, yam, and cassava has eased market shortages and provided some relief to households.

That said, the persistence of elevated month-on-month inflation underscores the fact that underlying cost pressures remain entrenched. For policymakers, this means that while the disinflation trend is welcome, monetary and fiscal authorities must remain cautious and proactive.

  • For the Central Bank of Nigeria (CBN), the challenge is to balance price stability with credit availability. While maintaining a restrictive stance through the Monetary Policy Rate (MPR) is necessary, complementary tools such as targeted credit interventions to the agricultural and energy sectors can help ease supply-side constraints.
  • On the fiscal side, the government must address structural bottlenecks, particularly in logistics, power supply, and insecurity in food-producing regions, which continue to fuel cost-push inflation.
  • Most importantly, anchoring inflation expectations through credible policy signaling will be key to consolidating the downward trend in headline inflation.

In summary, Nigeria’s inflationary environment is showing signs of improvement, but sustained progress will require a careful blend of monetary discipline, fiscal reforms, and structural interventions to secure lasting price stability.

CBN to hold first MPC meeting of 2025 in February

The Central Bank of Nigeria (CBN) has announced that its first Monetary Policy Committee (MPC) earlier scheduled for February 17 and 18, 2025, will now hold on Wednesday, February 19 and Thursday, February 20, 2025.

The announcement puts paid to speculation around the date of the 299th meeting, amid delays by the National Bureau of Statistics (NBS) to release the rebased Consumer Price Index (CPI).

With a date now fixed, the attention of economic watchers is focused on the meeting outcomes – on whether there will be a hold or hike in the monetary policy rate (MPR), going by current trends.

The first MPC meeting ought to have been held since January, but was shelved.

During the last meeting for 2024 which was held in November, the Committee raised the Monetary Policy Rate (MPR) for the sixth time by 25 basis points to 27.50%. This was to address rising inflation, which stood at 33.88% as of October 2024.

The asymmetric corridor around the MPR was retained at +500/-100 basis points; Cash Reserve Ratio of Deposit Money Banks at 50% and Merchant Banks at 16%; as well as the Liquidity Ratio at 30%.

But since then, inflation has risen for the fourth straight month, hitting a near 30-year high of 34.8% in December 2024, up from 34.6% in the prior month.

Food inflation, which constitutes over 50% of Nigeria’s inflation basket, moderated to 39.84% in December from 39.93% the previous month.

“The Central Bank is resolute and committed to continuing to fight the war against inflation and there is no going back on that.

“We are going to deploy everything in our arsenal to ensure that we are able to tame it. And of course, this entails the return to orthodox monetary policies,” Cardoso had stated at the end of the meeting, amid agitations of rising interest rates on the economy.

Surprise, Surprise! Nigeria’s Inflation Rate Slows Down

Nigeria’s inflation rate hasdroppedfor the first time in several months. According to the latest Consumer Price Index (CPI) report from the National Bureau of Statistics (NBS), inflation fell from 34.8% in December 2024 to 24.5% in January 2025.

Yay! So why did inflation reduce this much?

The National Bureau of Statistics (NBS) is changing how inflation is calculated.

One of the biggest changes has been rebasing the Consumer Price Index (CPI), the NBS tool to track inflation. The NBS has now shifted to using 2024 as the new base year. This means the starting point for measuring price changes has been updated to match today’s economic situation. It’s important because until now, the CPI has been based on data from 2009 when consumer habits and market conditions were quite different.

Another major change with this update is the inflation basket. Previously, the NBS measured inflation based on 740 items, but now that number has jumped to 934 goods and services. This expansion helps paint a complete picture of how prices change across various economic sectors. However, the new method gives less weight to food prices—the biggest driver of inflation—shrinking its share of the inflation basket from 51.8% to 40.1%. This adjustment means that even if food prices continue to rise sharply, their impact on the overall inflation rate will appear smaller.

The NBS also shifted focus towards categories that more accurately represent what people are actually spending on today. For instance, transportation, healthcare, and education have received more attention since these have become more significant parts of household budgets. With more weight placed on these areas, the inflation numbers aim to match everyday Nigerian realities better.

As a result of these changes, the inflation rate is now dropping noticeably. According to the NBS, the updated methodology offers a more transparent and accurate picture of price changes in the economy.

Are prices going down in the market?

Not necessarily. While inflation has slowed, it doesn’t mean market prices will drop significantly. The rebasing of inflation calculations is a shift in measurement, not an indication of falling prices. It aims to reflect current consumer spending more accurately but doesn’t reverse price trends.

For example, even though overall food inflation has declined, staples like Garri, rice, or cooking oil may remain expensive. Prices are influenced by ongoing challenges such as energy costs, transportation, and supply chain disruptions, which continue to drive up expenses.

For most Nigerians, food accounts for a large share of their income—much more than the 40.1% weighting now assigned in the inflation calculation. If food prices go up by 24% but the price of other elements in the CPI basket stays the same, inflation looks tamer, but only on paper. That’s why protecting your purchasing power and making smart financial choices remain essential.

The answer is investing.

When inflation rises, the value of your savings can shrink. But, by investing in assets that tend to perform well over time, like fixed income deposits, stocks, real estate, and other smart investment opportunities, you can protect your savings and grow your wealth.

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