Nigeria’s energy inflation fell to 4.37 per cent in July 2026, its lowest level in four months, as increased domestic fuel refining and relative stability in the foreign exchange market helped ease pressure on energy costs.
The latest Consumer Price Index (CPI) data from the National Bureau of Statistics (NBS) showed that the energy sub-index declined by 2.39 per cent month-on-month in July.
The moderation in energy prices also contributed to a decline in Nigeria’s headline inflation rate, which fell to 15.43 per cent in July from 15.91 per cent in June.
Analysts attributed the decline in energy inflation largely to increased domestic petroleum refining and improvements in fuel distribution.
During the month, ex-depot petrol prices were reduced by some domestic refiners following a decline in international crude oil prices. The Dangote Refinery, for instance, reportedly lowered its ex-depot petrol price to about ₦1,075 per litre.
The growing availability of locally refined petroleum products also reduced the exposure of marketers to international shipping costs and other logistics pressures associated with imported fuel.
Improved foreign exchange stability further helped prevent sharp increases in the cost of imported energy-related inputs, giving transport operators, manufacturers and logistics companies greater cost predictability.
The decline in energy inflation provided some relief for businesses that rely heavily on fuel for transportation, logistics and power generation.
Lower fuel-price pressures helped moderate operating costs for commercial transport operators, haulage companies and small businesses, while manufacturers also benefited from relatively improved cost conditions.
However, the decline in energy inflation has yet to translate into broad relief for households, particularly as food prices continue to rise.
Food inflation accelerated to 20.31 per cent in July, highlighting the widening gap between the improvement in energy prices and the persistent pressure on household food budgets.
Security challenges along agricultural routes, seasonal production pressures and transportation costs continued to contribute to higher prices for major staples such as rice and yam.
Core inflation, which excludes food and energy prices, also stood at 14.97 per cent during the month.
Despite the improvement in energy inflation, economists have warned that external developments could put renewed pressure on domestic fuel prices.
Volatility in international crude oil markets and geopolitical tensions around major global shipping routes could increase the cost of crude and other inputs used by domestic refiners.
Market participants are therefore expected to closely monitor developments in global oil prices, the foreign exchange market and upcoming monetary policy decisions to determine whether the recent moderation in energy and headline inflation can be sustained.
The July figures nevertheless point to the growing impact of domestic refining capacity and improved fuel supply on Nigeria’s inflation dynamics, even as food prices remain a major challenge for consumers.