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Despite Nigeria’s recent decline in headline inflation, the Centre for the Promotion of Private Enterprise (CPPE) has cautioned that persistent food price increases and structural inefficiencies continue to undermine economic stability.
The Director and Chief Executive Officer of CPPE, Dr. Muda Yusuf, gave the warning in a statement on Sunday while analyzing the National Bureau of Statistics (NBS) July 2025 inflation report.
According to Yusuf, while the report showed encouraging signs of stability, the persistent rise in food costs paints a more troubling picture for households and businesses.
The NBS data revealed that Nigeria’s headline inflation rate declined for the fourth consecutive month, falling from 22.22 per cent in June to 21.88 per cent in July 2025, representing a slowdown of 0.34 per cent.
Similarly, food inflation eased month-on-month, moderating from 3.25 per cent in June to 3.12 per cent in July.
Core inflation also posted marginal year-on-year declines and a sharp slowdown on a monthly basis, from 3.46 per cent to 0.97 per cent.
Yusuf attributed the gains to a gradually stabilising macroeconomic environment, supported by improved exchange rate management, government import duty waivers on staple foods such as rice, maize and sorghum, and renewed investor confidence.
He also cited the base effect of high inflationary trends in 2022, which has helped temper annual inflation figures.
However, Yusuf warned that month-on-month inflation pressures remain worrisome.
The July report showed that month-on-month headline inflation rose from 1.68 per cent in June to 1.99 per cent in July, while year-on-year food inflation climbed from 21.97 per cent to 22.74 per cent.
“These movements underscore the continuing vulnerability of the economy to supply-side shocks,” Yusuf stressed.
Analysts note that food inflation continues to drive the overall inflationary trend, largely due to structural challenges in agriculture and logistics.
Persistent insecurity in farming communities, high transport and logistics costs, and rising import dependence have all contributed to sustained food price hikes.
For Nigerian households, this means the cost of living remains extremely high, even though headline inflation figures appear to show improvement.
Many consumers are reportedly cutting back on protein consumption and shifting to cheaper substitutes, while small businesses face declining sales due to weakened purchasing power.
Yusuf called for urgent government action to consolidate gains and address the structural weaknesses fueling inflation.
“The outlook calls for caution and sustained reforms. Fiscal discipline is critical to ensure prudent government spending and to manage liquidity injections effectively so they do not fuel inflationary pressures,” he said.
On monetary policy, the CPPE boss urged the Central Bank of Nigeria (CBN) to go beyond conventional tightening tools such as the Monetary Policy Rate (MPR) and Cash Reserve Ratio (CRR).
With lending rates already above 30 per cent for most businesses, Yusuf noted that excessive tightening risks further stifling economic growth.
He instead recommended a coordinated mix of monetary, fiscal, and structural interventions. These include:
Ensuring exchange rate stability to anchor inflation expectations.
Investing in agricultural value chains to reduce food import dependence.
Addressing logistics bottlenecks, including poor road networks and port inefficiencies.
Tackling insecurity in farming communities to boost food production.
Introducing targeted subsidies or support for vulnerable households.
While the recent decline in headline inflation has been welcomed by investors and policymakers, Yusuf cautioned against over-optimism.
He stressed that without tackling food price volatility and structural rigidities, Nigeria risks reversing the modest gains recorded in the last four months.
“The July 2025 inflation report provides a basis for cautious optimism.
But persistent food price hikes and rising month-on-month inflation highlight deeper vulnerabilities in the economy.
Only sustained reforms can steer Nigeria toward lasting stability,” he concluded.