The Centre for the Promotion of Private Enterprise (CPPE) has raised concern that the ongoing war between Israel and Iran could trigger a fresh wave of fuel price hikes and inflationary pressure in Nigeria if not urgently addressed.
In a statement released by its Chief Executive Officer, Dr Muda Yusuf, the CPPE warned that the conflict may lead to a significant surge in the prices of petroleum, diesel, jet fuel, gas, and related energy products, with ripple effects on Nigeria’s already fragile economy.
Yusuf noted that energy cost remains a major driver of inflation in the country, and any further hike would affect production, logistics, transportation, and electricity costs, thereby increasing the financial burden on consumers and businesses.
“This presents an inflationary scenario. These additional costs would be passed on to final consumers, depending on the degree of consumer resistance,” the CPPE stated.
The Centre also warned that the conflict could spark imported inflation due to the global nature of energy pricing, and that central banks in Nigeria and elsewhere might respond with tighter monetary policies.
“High inflation typically leads to high interest rates as monetary authorities adjust to new economic realities. This could adversely affect access to credit, discourage investment, and put further strain on businesses, especially in the non-oil sector,” the statement added.
The CPPE further cautioned that Nigerian firms with direct supply chain links to the Middle East could be especially vulnerable to current instability in the region.
However, the Centre noted that the situation could also present a silver lining for Nigeria, as the rise in crude oil prices may boost foreign exchange earnings and improve liquidity in the forex market.
“Crude oil price has surged to $75 per barrel, about 15 percent higher than it was before the conflict broke out. This could positively impact Nigeria’s foreign reserves and help stabilise the naira,” Yusuf said.
Despite the possible short-term benefits, CPPE maintained that the broader economic implications of the war remain uncertain and called for proactive economic management to cushion any negative effects.
