…Warns rising energy costs, 19.59% food inflation could reverse gains
The Centre for the Promotion of Private Enterprise (CPPE) has called on the Central Bank of Nigeria (CBN) to consider further reductions in interest rates following the decline in Nigeria’s headline inflation to 14.63 per cent in September 2026, warning that rising energy costs and persistent food inflation could undermine the gains recorded so far.
The private sector advocacy group said the moderation in headline inflation from 15.39 per cent in August to 14.63 per cent in September, representing a decline of 76 basis points, strengthened the case for monetary easing to stimulate investment, reduce borrowing costs and support economic recovery.
In a policy statement signed by its Chief Executive Officer, Dr Muda Yusuf, the CPPE described the latest inflation figures as encouraging but cautioned that the economy remained vulnerable to supply disruptions, particularly in food production, energy and transportation.
The organisation noted that while core inflation declined from 13.29 per cent to 12.95 per cent, food inflation increased marginally from 19.57 per cent to 19.59 per cent, underscoring the continued pressure on household purchasing power.
According to Yusuf, the decline in inflation, alongside relative stability in the foreign exchange market, has improved the outlook for businesses and strengthened the argument for a gradual reduction in borrowing costs.
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He said the CBN’s decision in September to reduce the Monetary Policy Rate by 350 basis points to 23 per cent provided a foundation for further easing, although the benefits had yet to be fully transmitted to commercial lending rates.
The CPPE expressed concern that high interest rates continued to constrain manufacturing, agriculture, construction, trade and micro, small and medium enterprises, limiting their ability to access working capital, expand production and create jobs.
It argued that sustained reductions in lending rates would improve credit affordability, strengthen productive capacity and encourage private sector investment.
However, the organisation cautioned that monetary easing must be carefully managed to avoid undermining exchange rate stability or reigniting inflationary pressures.
Beyond interest rates, the CPPE identified the sharp increase in energy inflation as one of the most significant threats to Nigeria’s improving inflation outlook.
According to the September figures cited by the organisation, monthly energy inflation surged from 0.36 per cent in August to 5.38 per cent in September, an increase of 5.02 percentage points, while annual energy inflation stood at 10.85 per cent.
Yusuf warned that rising petrol, diesel and gas prices could quickly translate into higher transportation, manufacturing and distribution costs, potentially reversing recent improvements in headline inflation.
He attributed part of the pressure to volatility in international petroleum markets arising from the geopolitical crisis in the Middle East, noting that exchange rate stability alone could not completely shield Nigeria from global energy shocks.
The CPPE consequently urged the government to accelerate electricity sector reforms, expand compressed natural gas infrastructure, promote electric mobility and improve the efficiency and competitiveness of domestic petroleum refining.
On food prices, the organisation warned that the persistence of 19.59 per cent annual food inflation remained a major threat to household welfare, particularly among low income Nigerians who spend a substantial proportion of their earnings on food.
It explained that sustained food price increases reduce disposable income and weaken demand for manufactured goods, education, healthcare and other services, with adverse consequences for consumer facing businesses.
The CPPE identified insecurity in farming communities, inadequate rural infrastructure, post-harvest losses, high logistics costs and weak market connectivity as major structural factors sustaining food inflation.
It therefore called for targeted interventions to improve agricultural productivity, strengthen rural security, expand storage facilities and reduce the cost of transporting food from producing communities to major markets.
The organisation also drew attention to geographical disparities in inflation, noting that urban inflation exceeded rural inflation by 3.18 percentage points.
According to the CPPE, the disparity highlighted differences in transportation costs, market access, local supply conditions and consumption patterns, requiring greater coordination among federal, state and local governments.
It urged governments at all levels to improve interstate road networks, rural feeder roads, agricultural market infrastructure and logistics efficiency, while eliminating multiple levies and unnecessary checkpoints that increase distribution costs.
Despite the concerns, the CPPE acknowledged that the latest inflation report contained encouraging indicators, including the decline in monthly headline inflation from 0.71 per cent in August to 0.06 per cent in September.
Monthly food inflation also fell to negative 1.55 per cent, indicating a reduction in food prices during September compared with August, although prices remained substantially higher than a year earlier.
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The organisation, however, warned that monthly core inflation increased from negative 0.06 per cent in August to 1.11 per cent in September, suggesting that underlying price pressures had not been fully contained.
Yusuf stressed that declining inflation should not be confused with a general reduction in prices or business operating costs, explaining that sustainable economic recovery would require improvements in productivity, infrastructure, energy efficiency and domestic supply capacity.
The CPPE consequently urged the government to adopt a balanced inflation management strategy that combines prudent monetary easing with structural reforms in agriculture, energy, transportation and manufacturing.
It maintained that Nigeria’s recent disinflationary gains could only be sustained if policymakers addressed the underlying factors responsible for high production and distribution costs.
“The policy challenge is therefore twofold: sustain disinflation through credible macroeconomic management and address the structural factors that keep production, energy, transportation and food costs elevated,” the organisation stated.
