This week, we spotlight the February 2026 Consumer Price Index (CPI) data recently published by the National Bureau of Statistics (NBS). According to the data, Nigeria’s headline inflation rate eased by 4bps year-on-year (y/y) to 15.06% (Afrinvest projection: 14.6%), marking the twelfth consecutive months of price pressure moderation. The weaker than projected decline in the headline rate was mainly driven by upsurge in the food inflation rate which rose by 3.2ppts y/y to 12.1%, offsetting the gains from the 1.8ppts decline in core inflation rate to 15.9%.
From a monthly perspective, the inflation reading was largely volatile from the position recorded in the preceding month. For context, the headline rate spiked by 2.0% in February, reversing the deflationary reading of negative 2.9% in January. Food inflation rate jumped to 4.7% from negative 6.0% in January, while the core inflation rose mildly by 0.9% from a negative 1.7% in January.
Without undermining the impact of seasonality shocks from weak cross-country food supplies typically associated with fasting period (Ramadan and Lent started in February), we noted that the sharp volatility in the monthly inflation reading (which ought to better reflect the experience of the average citizen) was largely due to the recent statistical smoothing exercise by NBS.
Recall that in mid-January 2026, the NBS published updated back-casted CPI data for 2024 and 2025 with average of January to December 2024 CPI now adopted as the adjusting factor for the CPI rebasing as against the December 2023 to November 2024 previously adopted. The previous adopted December 2023 to November 2024 average adjusted factor lacked consistency, evidenced by the December 2024 CPI index of 100 which failed to align with prior months adjusted factors. Following this smoothing, we expect the monthly CPI readings to normalise in the near term.
Looking ahead, there are elevated downside risk factors that could sway inflationary risk to the upside. For perspective, the ongoing crises in the middle east have caused a major spike in crude oil prices to around $105.00/bbl. from $72.69/bbl. at the end of February. The immediate resultant effect of this development is the material spike in the cost of transportation, logistics, healthcare, and food items locally, due to the near double-fold increase in the retail prices of PMS (to ₦1,350 per litre), diesel (to ₦1,650 per litre) and cooking gas (to ₦1,400 per kg) in most states. This shock, coupled with subsisting structural drag factors – inadequate power supply, poor road network, and insecurity – is expected to stoke price pressure going forward.
In a base case scenario, we expect the negative pass through of this shock to drive a 150bps increase in y/y headline rate to 16.6% while m/m reading is estimated to spike to 5.2%. Should the external shock persist more than few months, the upbeat expectations of lower average inflation rate of 16.5% by the FG from 23.3% in 2025 could be significantly derailed. Against this backdrop, we recommend that the FG implement strategic interventions to cushion this shock on household by rolling out affordable country-wide mass transit, healthcare subsidy for the low-income bracket, and suspend tariff and other related charges on importers of food and other essential items that could further strain the wallet of the low-end income segment.
Domestic Equities: Bullish outing on the Bourse… ASI up 1.4% w/w
The local bourse closed the Eid Mubarak Holiday shortened week on a positive note as the NGX-ASI recorded a 1.4% gain to close at 201,156.85 points. Consequently, YTD performance rose to 29.3% (previously 27.5%) while market capitalisation increased to ₦129.1tn. Trading activity level increased as average volume and value rose 339.6% and 170.1% to 2.9bn units and ₦89.1bn, respectively. The top traded stocks by volume were FCMB (587.1m units), WEMABANK (557.9m units) and ZENITHBANK (386.6m units), while the top traded stocks by value were DANGCEM (₦172.8bn), ZENITHBANK (₦42.1bn), and MTNN (₦35.4bn).
Performance across our coverage sectors was mixed as three indices closed in the positive territory while the other three indices lost. The Industrial Goods and Banking indices gained 9.7% and 4.3% respectively, driven by gains in PREMPAINTS (+20.6%), AUSTINLAZ (+15.9%), ZENITHBANK (+18.3%), STERLING (+12.5%). Likewise, the AFR-ICT index rose 2.5% due to price uptick in ETRANZACT (+10.7%) and CHAMS (+1.8%).
Conversely, the Consumer Goods and Insurance indices fell 0.1% and 0.4% supported by price decrease in INTBREW (-4.4%), NB (-3.2%), SOVRENIN (-10.8%), INTENEGINS (-6.2%). Similarly, losses in ARADEL (-9.7%) and OANDO (-6.1%) dragged the Oil & Gas index lower by 4.8%.
Investor sentiment, as measured by market breadth, improved to 0.0x (previously -1.0x) as 45 stocks gained, 46 lost while 50 remained unchanged. The top gainers for the week were BUACEMENT (+39.0%), LIVESTOC (+25.6%), and JOHNHOLT (+25.4%) while ETERNA (-21.5%), PRESCO (-18.4%), and OMATEK (-15.7%) led the laggards. In the coming week, we expect the bullish performance to be sustained driven by selective accumulation in large-cap stocks as investors position ahead of pending earnings releases (notably, banks FY:2025) and dividend announcements.
Afrinvest
