Nigeria’s Spending On Foods, Drinks To Rise By 7.7% – Analysts

Nigeria’s household spending on food, beverages and other consumer items is projected to rise sharply in 2026, with private consumption expected to expand by 7.7 per cent, according to analysts at BMI, a Fitch Solutions company.

The analysts said the rebound in consumer spending would be a key driver of economic growth as the country gradually recovers from the impact of sweeping macroeconomic reforms implemented between 2023 and 2024.

They estimate that stronger household consumption alone will contribute about 2.3 percentage points to Nigeria’s headline real GDP growth.

The projection reflects a turnaround from the economic strain triggered by the liberalisation of the foreign exchange market and the removal of fuel subsidies under President Bola Tinubu’s administration.

Those reforms, while aimed at restoring macroeconomic stability, initially fuelled high inflation and eroded purchasing power, leading to a contraction in consumer demand.

BMI noted that although a cautious recovery began in 2025, consumer spending is expected to strengthen further as inflationary pressures ease. Average inflation is forecast to moderate from 21.0 per cent in 2025 to 14.2 per cent in 2026, its lowest level since 2020, supported by a more stable exchange rate and tighter liquidity conditions.

The easing of inflation is expected to relieve pressure on household budgets and unlock pent-up demand, particularly for essential goods such as food and drinks. However, analysts cautioned that a full rebound in consumption may be constrained by government efforts to strengthen revenue mobilisation, including a proposed five per cent fuel levy and broader tax compliance measures, which could limit disposable incomes.

Despite these headwinds, household consumption is expected to remain the largest contributor to economic growth. Fixed investment is also projected to support expansion, aided by lower inflation that could allow the Central Bank of Nigeria to cut its policy rate by a cumulative 300 basis points to 24 per cent by the end of 2026.

Such easing is expected to boost credit uptake and stimulate private-sector investment.

Major infrastructure projects, including the Lagos–Calabar Coastal Highway and Railway, the Eastern Rail Corridor linking Port Harcourt to Maiduguri, and ongoing capital expenditure at the Dangote Refinery, are forecast to provide additional momentum to construction activity and gross fixed capital formation, which is projected to grow by seven per cent.

Oil production is expected to record modest gains, averaging 1.73 million barrels per day, slightly above Nigeria’s OPEC quota, driven by midstream upgrades and incremental output from smaller fields. However, analysts warned that limited new oil projects and persistent security challenges would cap growth.

Looking ahead, BMI expects GDP growth to moderate to 3.8 per cent in 2027, supported by continued recovery in domestic demand and further monetary easing.

Inflation is projected to average 11.5 per cent, although export growth may be constrained by the absence of major new oil developments until 2028.

The analysts also flagged key downside risks, including potential disruptions at the Dangote Refinery, rising insecurity in agricultural and oil-producing regions, and the risk of trade or financial restrictions stemming from strained relations with the United States, all of which could weigh on Nigeria’s growth outlook.