Inflation is back in the headlines, and this time it is not playing nice.
In America, prices just surged to a three-year high, driven by an oil shock rippling through every economy tied to the dollar. In Nigeria, core inflation accelerated faster than headline numbers suggest, which means the pressure is spreading beyond food stalls into every corner of the economy. And while all of this was happening, Nigeria’s pension regulator cleared the path for retirement funds to back the country’s largest refinery IPO.
Let’s get into the details.
Global Economy
US: Inflation Hits Three-Year High on Energy Surge
The annual inflation rate in the US accelerated to 3.8% in April 2026 from 3.3% in March, marking the highest level since May 2023 and exceeding market expectations of 3.7%. After months of gradual decline toward the Federal Reserve’s 2% target, inflation is now decisively heading back up. The driver is energy, and the cause is the Iran conflict. That combination puts the Fed in an impossible position.
Energy costs surged 17.9% year over year, the sharpest increase since September 2022. To understand what that means in practice, consider what uses energy. Cars need gasoline, homes need heating oil and gas, factories need electricity, trucks need diesel to move goods, and planes need jet fuel. Thus, everything that requires energy to produce, transport, or operate becomes more expensive. Gasoline prices rose 28.4% year-over-year. Fuel oil prices jumped 54.3%.
Shelter inflation rose to 3.3% from 3.0%. Food inflation stood at 2.3%. These categories don’t move as dramatically as energy, but they matter because they represent non-discretionary spending. People can defer buying a new phone or canceling a vacation, but they can’t stop paying rent or buying food. When shelter and food costs are rising while energy costs surge, households face simultaneous pressure across all essential categories.
Monthly consumer prices rose 0.6% in April, moderating from 0.9% in March but still representing a substantial monthly acceleration. Core inflation, which excludes food and energy, edged higher to 2.8% year-over-year from 2.6% in March. Core inflation rising when energy prices are spiking suggests the shock is transmitting beyond just fuel costs into the broader economy. Companies are using energy price volatility as cover to raise prices across the board. Monthly core CPI rose 0.4%, accelerating from 0.2% in both February and March and exceeding expectations of 0.3%. A 0.4% monthly core move annualizes to nearly 5%. If that pace persists even for a few months, the Fed faces a serious problem.
China: Transport Costs Spike as Supply Chain Disruptions Bite
China’s annual inflation rate accelerated to 1.2% in April 2026 from 1.0% in March, surpassing market expectations of 0.8%. At 1.2%, China’s inflation remains modest by global standards. But the direction and composition matter more than the level. Non-food inflation rose to 1.8% from 1.2%, driven by a sharp pickup in transport costs that jumped to 4.6% from 0.9% in March.
The jump in transport costs directly reflects the impact of the Middle East conflict on Chinese supply chains. China imports enormous volumes of goods through shipping routes that pass near the conflict zone. When shipping costs rise due to route disruptions, insurance premiums increase, or vessel shortages, those costs show up in domestic prices for imported goods and anything that gets moved around the country. The cascade from global conflict to Chinese consumer prices is direct and measurable.
Prices also rose across key segments, including clothing by 1.5%, healthcare by 2.2%, and education by 1.3%. Housing costs remained in decline, down 0.2%, continuing a trend reflecting China’s struggling property market. A country where house prices are falling while transport and healthcare costs are rising creates a mixed picture for consumers.
On the food side, prices fell 1.6%, reversing the 0.3% increase recorded in March. This was the first food price decline since January, driven by persistently weak pork prices and lower costs for fresh vegetables and fruits. Pork is a dominant component of China’s food inflation because it’s a dietary staple. Falling pork prices provide relief to household food budgets even as other categories get more expensive. Core inflation edged up to 1.2% from 1.1%. Modest core acceleration alongside stronger non-food inflation suggests the price pressures building in China are real rather than just energy volatility.
Sub-Saharan African Economies
African Eurobonds weakened across the board:
South Africa: Strongest Expansion Despite Supply Chain Chaos
The S&P Global South Africa PMI held at 51.6 in April 2026, matching March’s reading and representing the strongest expansion in business activity since August 2022. It indicates the expansion momentum from April didn’t fade as the month progressed. Output growth reached an 11-month high. New orders increased at the fastest pace in more than one and a half years. Employment growth hit its highest level since September 2022.
Survey respondents noted that part of the demand increase was due to precautionary stockpiling amid concerns about the Middle East conflict. Businesses are ordering extra to build buffer inventory in case supply chains become more disrupted. That kind of precautionary demand inflates activity numbers without reflecting genuine underlying consumption growth. When Middle East tensions ease and businesses stop building safety stock, that demand source disappears quickly.
Supply chain conditions continued to deteriorate. Geopolitical disruptions contributed to longer supplier delivery times, with lead times reaching their highest levels in over 1.5 years. When suppliers consistently deliver late, businesses face production scheduling problems, customer service issues, and inventory management challenges. These concerns translate into missed deadlines, customer complaints, and operational costs that erode the profitability that strong sales should generate.
Input cost inflation surged to a 30-month high, driven by higher fuel prices and rising supplier charges. In response, firms increased output prices at the fastest pace since August 2024. Input costs rise. Companies raise prices. Consumers pay more. Workers demand wage increases to maintain living standards. That feeds back into labor costs, which becomes an input cost. Breaking this cycle requires either demand destruction or external cost relief. Neither is happening right now. Despite stronger activity levels, businesses remained cautious about the outlook, citing persistent geopolitical uncertainty and elevated cost pressures.
Domestic Economy
Major Updates During the Week
1. Inflation Ticks Higher as Food Prices Stay Elevated
Nigeria’s headline inflation rose to 15.69% in April 2026 from 15.38% in March. That’s the second consecutive monthly increase after eleven months of disinflation. Two months of rising inflation can still be noise. Three months would constitute a clear trend reversal. The April reading was driven largely by persistent food price pressures despite a moderation in month-over-month inflation. Rising food prices, while overall monthly inflation slows, create an uncomfortable divergence.
Food inflation reached 16.06% in April, up from 12.12% in February. The sharp acceleration in food prices over the past two months is notable. Food dominates household spending in Nigeria, so when food inflation is running at 16%, the headline number understates what most families experience at the market. The household budget impact is more severe than the 15.69% headline suggests because food represents a disproportionate share of total consumption for most Nigerian households.
Core inflation at 15.86% in April shows that underlying price pressures are building beyond food volatility alone. When core inflation is nearly as high as headline inflation, it means price pressures are broadly distributed rather than concentrated in a few volatile categories. The CBN’s Monetary Policy Committee is meeting next week, and markets expect it to hold rates steady. But two consecutive months of rising headline and core inflation, alongside food prices running above 16%, create pressure to at least signal awareness of the deteriorating trend.
2. PENCOM Opens Door to Dangote Refinery IPO
The National Pension Commission granted pension fund administrators a one-off regulatory forbearance to invest in the upcoming IPO of Dangote Petroleum Refinery and Petrochemicals FZE. PENCOM cited the company’s strategic economic importance, strong growth potential, and Dangote Industries Limited’s track record as justification. Let’s break down why this matters and what it means in practice.
Pension funds operate under strict investment guidelines that specify which assets they can hold and in what proportions. These rules exist to protect retirement savings. IPOs, especially those of large private companies becoming public for the first time, typically fall outside normal pension fund investment parameters due to concentration risk and valuation uncertainty. A regulatory forbearance is a temporary exemption that allows funds to do something they’d normally be prohibited from doing. Granting this forbearance specifically for the Dangote Refinery IPO is a regulatory signal that the government wants this IPO to succeed and wants domestic institutional capital committed to it.
Why does the government care? The Dangote Refinery is the world’s largest single-train refinery. Its operational success reduces Nigeria’s dependence on petroleum product imports, which consume enormous amounts of foreign exchange. If pension funds invest in the IPO, it brings institutional capital into the deal, potentially stabilizing the share price and signaling quality to other investors. For pension fund beneficiaries, the investment might deliver strong returns if the refinery performs as projected. But it also concentrates exposure to a single large asset with significant execution and operational risks that normal pension investment rules are designed to avoid.
The description of this as a one-off forbearance is important. PENCOM isn’t changing the rules permanently. They’re making a specific exception for a specific opportunity they believe warrants special treatment. That framing protects the overall pension regulatory framework while allowing participation in what regulators view as an exceptional strategic investment.
Equity Market: Year-to-Date Returns Hit 61.47%
The Nigerian equity market closed the week up 2.28%, reaching 250,330.92 points. Year-to-date returns hit 61.47%. A 61% year-to-date return by mid-May is extraordinary. It means Nigerian equities have generated in under five months what most markets hope to achieve in several years. Market capitalization settled at ₦160.44 trillion. Investors traded 1.08 billion shares worth ₦44.29 billion across 65,744 deals.
The rally was driven by strong gains across diverse names. BERGER jumped 55.57%. SCOA rose 45.92%. DAARCOMM gained 42.41%. FIDSON climbed 32.52%. LEARNAFRCA added 32.32%. Banking stocks that had been crushed the previous week showed significant recovery. Dangote Cement gained 8.46%. Access Corporation rose 9.11%. UBA gained 10%. ETI advanced 10.68%. The recovery in banking names after last week’s sharp selloff suggests the prior declines were indeed overdone rather than reflecting fundamental deterioration.
Losses in ZICHIS, TIP, NCR, and CUSTODIAN moderated overall performance, but the market’s breadth and direction were broadly positive. The recovery in both banks and industrials simultaneously indicates healthy rotation and broad-based buying rather than sector-specific momentum. When different parts of the market take turns leading, it’s typically healthier and more sustainable than rallies driven by a narrow group of stocks.
Fixed Income Market: Bills Rally While Bonds Weaken
The fixed-income market ended the week on a mildly bullish note, supported by sustained buying interest in Treasury bills amid strong system liquidity. But that positive tone didn’t extend to all instruments. The bond market closed on a weaker note, creating another divergence between short- and long-term government debt.
Demand in the treasury bills segment was primarily concentrated at the short and long ends of the curve. Short-term yields fell 9 basis points. Long-tenor yields declined 12 basis points. Mid-tenor yields rose 8 basis points. Buying concentrates at the extremes of the curve while avoiding the middle reflects specific positioning rather than broad enthusiasm for government paper. Investors are targeting particular maturities based on their rate expectations rather than buying across the board.
The bond market saw upward yield movements, particularly across mid- to long-term instruments. Short-end bond yields fell 28 basis points to 17.74%, reversing some of the dramatic spike from previous weeks. When short-end bond yields fall while long-end yields rise, the curve is flattening from an unusual steepness back toward a more normal shape. That adjustment reflects repositioning after the violent short-end moves of recent weeks.
In the Eurobond market, Nigeria’s sovereign papers weakened. Yields increased 23 basis points week-over-week to 6.94%. The report attributes this to investors remaining cautious following recent data releases that reinforced expectations of a higher-for-longer global yield environment. When US inflation comes in at 3.8%, and core CPI accelerates, it reduces the probability of Fed rate cuts. Higher US rates for longer means investors demand higher yields on all dollar-denominated assets globally, including Nigerian Eurobonds. The 23-basis-point increase directly reflects markets’ repricing of Nigerian dollar debt to reflect a less accommodative global rate environment.
The Bottom Line
Last week was an inflation story everywhere you looked. US inflation hit 3.8%, its highest in three years, driven by an oil shock that shows no signs of easing. Nigeria’s own inflation crept up to 15.69%, with core inflation accelerating sharply. China’s prices are rising too. And South African factories are booming, but their costs are surging.
For the average investor, the lesson is this: inflation is not going away quietly. Central banks will keep rates higher for longer. That means your borrowing costs stay elevated. But it also means fixed-income yields remain attractive if you know where to look. The NGX is up 61% year-to-date, which is remarkable. But banking volatility is a reminder that not all rallies are smooth.
