The Centre for the Promotion of Private Enterprise (CPPE) has warned that rising food prices remain the biggest challenge to Nigeria’s inflation outlook despite a slight decline in the headline inflation rate to 15.91% in June. In a policy brief released on Thursday, the private sector advocacy group said the latest inflation figures suggest that while macroeconomic conditions are gradually stabilising, persistent structural problems continue to fuel food inflation and the cost-of-living crisis.
Food inflation accelerates despite headline moderation
The CPPE’s position comes after the National Bureau of Statistics (NBS) reported that Nigeria’s headline inflation eased marginally to 15.91% in June, from 15.93% in May. However, food inflation rose to 17.52% year-on-year, while month-on-month food inflation climbed sharply to 3.75%, indicating renewed pressure on the prices of essential food items. “The dominant concern in the report is the renewed acceleration in food inflation,” the CPPE said. The organisation noted that the increase signals that food prices have resumed an upward trend after a brief period of moderation.
Household welfare under threat
The Chief Executive Officer of the CPPE, Muda Yusuf, said food inflation continues to pose the greatest risk to household welfare because it directly affects purchasing power and deepens poverty. According to him, sustained moderation in food prices is essential to easing the cost-of-living crisis and strengthening public confidence in ongoing economic reforms. The NBS identified food and non-alcoholic beverages as the single largest contributor to headline inflation during the month, followed by transport, restaurants and accommodation services, housing, education and healthcare.
Structural, not monetary challenge
The CPPE argued that Nigeria’s inflation is increasingly driven by structural constraints rather than excessive consumer demand. It identified insecurity in farming communities, high transportation and logistics costs, rising energy prices, expensive fertilisers, supply chain disruptions and imported inflation linked to global geopolitical tensions as the major drivers of food prices. According to the organisation, these are problems that monetary policy alone cannot resolve. “The June inflation report reinforces the view that Nigeria’s inflation challenge is predominantly structural rather than monetary,” the policy brief stated. It added that food, transportation, housing, utilities and energy currently account for roughly 72% of inflationary pressures, suggesting that government interventions should focus on those sectors.
Urban inflation pressures
The CPPE also expressed concern over persistent inflation in urban centres. Urban inflation stood at 16.08% in June, exceeding the national headline inflation rate of 15.91%, while month-on-month urban inflation increased from 1.99% to 2.13%. Mr Yusuf attributed part of the trend to the growing movement of people from rural communities affected by insecurity into cities. He noted that the population shift has increased demand for housing, transportation, utilities and other essential services, thereby placing additional pressure on prices in urban areas. The CPPE argued that restoring security in farming communities would not only improve agricultural production but also help reduce inflationary pressures in cities.
Reforms should target agriculture
The organisation urged governments at all levels to prioritise investments that expand food production and reduce production costs. It recommended improving security in farming communities, expanding irrigation and all-season farming, accelerating agricultural mechanisation, promoting technology adoption, improving access to affordable credit and farm inputs, reducing post-harvest losses through better storage facilities and lowering transportation costs across agricultural value chains. The CPPE also advocated greater efforts to make agriculture more technology-driven and attractive to young Nigerians. In addition, it urged the government to sustain exchange rate stability and deepen domestic petroleum refining to reduce dependence on imported fuel and moderate imported inflation.
Monetary policy outlook
The CPPE said the latest inflation figures do not justify another increase in interest rates by the Central Bank of Nigeria’s Monetary Policy Committee (MPC). Instead, it urged monetary and fiscal authorities to work together to address the structural causes of inflation. “The immediate policy priority should be for the monetary authorities to collaborate with the fiscal authorities to accelerate structural reforms that expand food supply, improve logistics, reduce energy and production costs, strengthen domestic value chains and enhance productivity,” the organisation said. It also commended the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, for establishing a ministerial advisory committee to recommend practical solutions to Nigeria’s structural economic challenges and the rising cost of living. According to the CPPE, addressing these underlying constraints offers the most sustainable path to lower inflation, stronger economic growth and improved living standards for Nigerians.
