CPPE: Middle East Geopolitical Tensions Behind Rising Inflation Rate

The Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, said that the 0.24 per cent rise in headline inflation—from 15.69 per cent in April 2026 to 15.93 per cent in May 2026—reflected the continuing impact of recent geopolitical tensions in the Middle East on global energy markets and supply chains.

Yusuf, who made the remarks yesterday, noted that the surge in crude‑oil prices, higher marine‑insurance costs, disruptions to shipping routes and increased import costs have all combined to exert upward pressure on domestic prices.

He added that beneath the year‑on‑year increase lies a more encouraging trend: headline inflation moderated on a month‑on‑month basis from 2.13 per cent in April to 1.75 per cent in May, while food inflation eased from 3.63 per cent to 2.98 per cent.

“This suggests that although inflationary pressures persist, the pace of price escalation is slowing,” Yusuf said.

“It is also noteworthy that the current inflation rate remains significantly below the 26.06 per cent recorded in May 2025, underscoring the substantial disinflation achieved over the past year,” he added.

According to him, food and beverages, transportation, housing, energy, health and education remained the major drivers of inflation, which collectively account for about 87 per cent of headline inflation.

“This highlights the reality that the inflation burden is concentrated in the basic necessities consumed by ordinary Nigerians,” Yusuf said.

“Food inflation at 16.96 per cent remains particularly concerning, as it continues to outpace headline inflation and weaken household purchasing power,” he added.

Yusuf said the major structural factor behind elevated food prices was the persistent insecurity in key food‑producing regions.

“Insecurity has displaced farming communities, reduced cultivated acreage, disrupted agricultural supply chains and increased transportation costs,” he explained.

“The consequence is lower agricultural output and tighter food supply, which continue to fuel food inflation. Therefore, tackling insecurity is not only a security imperative; it is also a critical inflation‑management strategy,” he said.

The CPPE noted that the inflation challenge still remained largely cost‑push in nature and remarked that, “the solution lies less in monetary tightening and more in addressing the structural drivers of production and distribution costs.”

According to the organisation, government intervention should focus on improving food security, strengthening logistics infrastructure, investing in mass transit and rail transportation, enhancing energy security and restoring safety in farming communities.

Yusuf stated that the recent diplomatic breakthrough in the Middle East and the moderation of crude‑oil prices from about $90 per barrel to approximately $83 per barrel provided grounds for cautious optimism.

He said: “If geopolitical tensions continue to ease and supply‑chain conditions improve, inflationary pressures could begin to moderate from the third quarter of 2026.”

“For now, the inflation uptick appears to be more of an external shock phenomenon and domestic structural headwinds than a reflection of domestic macroeconomic instability,” Yusuf said.

“The policy priority should therefore be to tackle the structural cost drivers of inflation, particularly insecurity, food‑supply constraints, transportation costs and energy prices,” he added.

“These are the pressure points that matter most to citizens’ welfare and business competitiveness.”