Stagflation risk looms as CPPE warns of economic pressures in Q2 2026

The Centre for the Promotion of Private Enterprise (CPPE) has raised concerns over rising risks of stagflation in Nigeria.

It warned that mounting economic and political pressures could threaten the country’s fragile recovery in the second quarter of 2026.

In its latest economic outlook, the think tank, led by Muda Yusuf, said while the economy has shown signs of improvement, the sustainability of growth remains uncertain amid increasing downside risks.

“The outlook for Q2 2026 reflects a combination of sustained macroeconomic momentum and rising downside risks,” the report noted, highlighting global energy shocks and domestic fiscal challenges as key concerns.

CPPE warned that rising global oil prices driven by geopolitical tensions are already pushing up fuel costs in Nigeria, increasing transportation, production, and logistics expenses, and worsening the cost-of-living crisis for households.

The report described Nigeria’s disinflation trend as fragile, cautioning that inflationary pressures could intensify, eroding real incomes and weakening consumer demand.

It also projected slower economic growth, citing high energy costs and reduced purchasing power, while flagging stagflation, a mix of high inflation and low growth as a major emerging threat.

On monetary policy, the think tank said the Central Bank of Nigeria is likely to maintain a cautious stance, noting that further tightening may have limited impact on inflation while constraining investment and credit growth.

CPPE further warned that political activities ahead of the 2027 general elections could disrupt economic reforms, with rising defections and realignments posing risks to policy stability.

It also highlighted fiscal concerns tied to the 2026 budget, including weak revenue performance and potential political interference in government spending.

The organisation advised businesses to adopt cost-cutting measures, explore alternative energy sources, and manage foreign exchange risks, while urging investors to focus on resilient sectors with strong demand and export potential.