Some economic experts have identified rising fuel and energy costs as the primary drivers of the latest increase in inflation in Nigeria. They said higher petrol and diesel prices had triggered increases in transport fares, logistics costs and the general distribution of goods across the country.
Prof. Ken Ife, development economist, attributed Nigeria’s recent uptick in inflation to rising energy costs and structural inefficiencies in the oil and gas sector, calling for urgent policy actions to stabilise prices.
Ife, a public policy analyst, said Nigeria’s inflation rate, which rose slightly to 15.38 percent in March after 12 consecutive months of decline, was largely driven by increases in fuel and energy prices.
According to him, energy remains a critical driver of inflation due to its central role in transportation, production, and distribution.
“When energy prices go up, petrol and diesel prices rise, and these drive the entire transportation system.
“The cost of moving food, goods and people increases, and that translates directly into higher prices across all sectors.
“This may likely be worse on a month-on-month basis . You will see month-on-month inflation going dramatically up.”
He said rising gas prices, which are benchmarked internationally, also contribute to higher electricity tariffs and production costs.
“As gas prices increase, the cost of power generation rises, and consumers feel it in their electricity bills.
“Manufacturers also face higher costs due to increased energy and logistics expenses, leading to general price increase,” he said
The professor said that while global factors such as tensions in the Middle East may influence energy prices, Nigeria’s situation was worsened by domestic structural challenges.
He criticised the handling of crude oil allocation, saying that local refining capacity was not being prioritised as required by law.
Ife referenced the operations of the Dangote refinery, stating that it was not receiving adequate crude supply for optimal production.
“Local refiners require sufficient crude to operate efficiently, but current allocations fall short.
“This forces them to source crude externally at higher costs, including additional shipping and insurance charges, which ultimately push up domestic fuel prices.”
He said such inefficiencies put pressure on the economy and contribute to inflationary trends.
On immediate measures, the expert urged authorities to prioritise crude supply to domestic refineries and ensure compliance with existing laws.
“Providing adequate crude for local refining and allowing transactions in Naira, as stipulated, will reduce costs and ease pressure on consumers.”
He cautioned against a return to fuel subsidies or increased borrowing to cushion economic hardship, describing such measures as unsustainable.
“We are not going back to subsidies or excessive borrowing. The focus should be on fixing structural issues in the energy sector to ensure long-term stability,” he said.
Ife said addressing these challenges would help moderate inflation and improve overall economic conditions.
Also, an economist, Mr. Chidi Nwanze, said the rise in inflation could be linked to renewed pressures in transportation and service costs.
“The rise, though marginal, suggests that structural factors such as logistics costs, exchange rate fluctuations and energy prices are still influencing inflation dynamics,” he said.
A financial analyst, Mr. Segun Ibikunle, said the sharp increase in month-on-month inflation was a more concerning indicator.
“The jump to 4.18 percent month-on-month shows that price increases are accelerating in the short term.
“If sustained, it could reverse the gains recorded over the past year,” he said.
The March inflation figures showed that on a year-on-year basis, Nigeria’s headline inflation rose slightly to 15.38 percent compared to 15.06 percent and 27.35 percent recorded in February and March.
The report was released by the National Bureau of Statistics (NBS).
It said that the month-on-month headline inflation rate in March was 4.18 percent, which was 2.17 percent higher than the rate recorded in February at 2.01 per cent.
The NBS identified food and non-alcoholic beverages, restaurants and accommodation services and transport as the major contributors to the headline inflation on a year-on-year and month-on-month basis.
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