Economist Rewane Warns Nigeria Inflation Could Hit 20%

Bismarck Rewane, a prominent Nigerian economist, warned that the country's inflation could accelerate to between 17% and 20% by December 2026, driven by structural inefficiencies, currency weakness, energy price shocks, and supply bottlenecks. Speaking at the Lagos Business School Breakfast Session, Rewane argued that the government's current anti-inflation measures — including import duty reductions for over 100 product categories, public sector wage adjustments, and aviation fuel price caps — address symptoms rather than the structural drivers of inflation, such as energy inefficiencies and weak domestic production.

He cautioned that these interventions risk reducing government revenue, increasing import dependence, and potentially weakening the balance of payments. Rewane emphasized that monetary tightening alone is insufficient without structural reforms to improve production and supply chain efficiency, calling instead for coordinated monetary, fiscal, and structural reforms rather than isolated administrative actions.

Beyond inflation, Rewane flagged vulnerabilities in the Nigerian equity market. He warned that recent gains on the Nigerian Exchange are driven by liquidity and retail inflows rather than corporate earnings fundamentals, leaving the market fragile as inflation erodes real household incomes and consumer demand. He argued that current policies may increase investor uncertainty in manufacturing and import-dependent sectors, compounding the risk of a valuation correction.