Energy inflation rebounds to 4.69% as fuel, power costs squeeze

Nigeria’s energy inflation rose to 4.69 per cent in August 2026 from 4.40 per cent in July, ending the previous month’s decline and highlighting renewed pressure on households and businesses even as headline inflation continued to moderate.

The National Bureau of Statistics (NBS), in its August Consumer Price Index report released on Tuesday, said the increase represented a 0.29 percentage-point rise in annual energy price growth.

Headline inflation, however, slowed for the third consecutive month, easing marginally to 15.39 per cent in August from 15.43 per cent in July. The divergence means that while overall price pressures are gradually moderating, energy remains a stubborn source of cost pressure across the economy.

Energy inflation has been volatile this year. It rose from 11.17 per cent in January to a peak of 12.90 per cent in February, before falling to 9.90 per cent in March and 4.60 per cent in April. It increased to 5.73 per cent in May, jumped again to 9.90 per cent in June and then fell to the year’s low of 4.40 per cent in July.

The August increase therefore shows that the earlier moderation has not yet developed into a sustained downward trend.

For Nigerians, the significance extends beyond electricity bills. Energy costs feed into transportation, food distribution, manufacturing, retailing and household spending, particularly in an economy where businesses frequently rely on alternative power sources because of unreliable grid supply.

The pressure is becoming more visible in petrol prices, with PMS selling for about N1,400-N1,450 per litre in several major cities. Higher fuel costs increase the cost of running generators, transporting goods and delivering services, creating another channel through which energy prices can feed into inflation.

The latest Central Bank of Nigeria inflation expectations survey also shows how deeply energy costs are embedded in the financial pressures facing households and companies. Energy recorded the highest inflation-perception score among businesses at 74.1 points and among households at 61.9 points.

Businesses reported particularly significant increases in inflation-related expenditure, with about 60 per cent of firms indicating higher costs. The figures underline the fact that even when the official energy inflation rate is relatively low, the cumulative cost of electricity, petrol and alternative power remains substantial.

The burden is especially significant for small businesses that cannot easily absorb higher energy bills or pass the full increase to customers. For manufacturers and service providers, expensive self-generation can reduce margins, raise prices and weaken competitiveness.

Households face a similar trade-off. Those dependent on petrol generators incur recurring fuel costs, while families seeking greater energy independence through solar systems face large upfront investment requirements.

The NBS data therefore point to a delicate stage in Nigeria’s disinflation process. Falling headline inflation is encouraging, but a renewed increase in energy costs could slow the transmission of that improvement to household budgets and business operating expenses.

For policymakers, the priority remains reducing the structural cost of energy through more reliable electricity supply, lower transmission and distribution losses, expanded gas and renewable power and more efficient transport infrastructure.

Without a sustained reduction in energy costs, the headline inflation decline may continue to coexist with a cost-of-living squeeze that businesses and households experience far more sharply than the headline numbers suggest.