The Centre for the Promotion of Private Enterprise (CPPE) says Nigeria’s latest inflation data suggests the economy is beginning to stabilise, even as key vulnerabilities persist.
In a statement released on Sunday, CPPE’s Chief Executive Officer, Muda Yusuf, described the July 2025 inflation figures as a mixed bag, reflecting both progress and ongoing risks that require thoughtful policy responses.
The National Bureau of Statistics (NBS), in its report published on August 15, revealed that Nigeria’s headline inflation rate eased slightly to 21.88% in July, down from 22.22% in June marking a small but notable decline in price pressures.
According to Yusuf, the numbers point to a gradually improving macroeconomic environment, underpinned by factors such as exchange rate stability, stronger investor sentiment, and the continued effect of import duty waivers on essential food items like rice, maize, and sorghum.
“Month-on-month food inflation moderated, falling from 3.25% in June to 3.12% in July,” Yusuf said. “Core inflation also showed improvement declining year-on-year by 0.03%, and slowing sharply month-on-month from 3.46% to 0.97%.”
He added that the high inflationary base from previous years has also contributed to the relative easing in current figures.
Warning Signs Still Visible
Despite the positive developments, Yusuf noted that inflationary pressures remain deeply embedded, especially in areas vulnerable to supply shocks.
“Month-on-month headline inflation, which better captures short-term trends, actually rose from 1.68% in June to 1.99% in July,” he observed. “Meanwhile, year-on-year food inflation crept up from 21.97% to 22.74%.”
These figures, he said, highlight persistent structural weaknesses in the economy from logistics bottlenecks to insecurity and high import costs that continue to drive up prices and strain household incomes.
Policy Priorities Moving Forward
Yusuf outlined several key areas where urgent policy action is needed to consolidate gains and prevent inflation from surging again:
- Foreign exchange management: Maintain calm in the FX market to support price stability and investor confidence.
- Structural reforms: Tackle critical cost drivers like insecurity, port inefficiencies, logistics challenges, and climate-related risks.
- Fiscal discipline: Ensure government spending is prudent and liquidity injections are carefully managed to avoid fuelling demand-pull inflation.
- Monetary innovation: Move beyond traditional tools like the Monetary Policy Rate (MPR) and Cash Reserve Ratio (CRR), and explore more flexible mechanisms to control liquidity — especially with lending rates climbing above 30% for many businesses.
A Cautiously Optimistic Outlook
While acknowledging recent progress in slowing both headline and core inflation, Yusuf stressed that ongoing economic reforms must be deepened to address the root causes of inflation.
“The July report offers a basis for cautious optimism,” he said. “But the rise in food prices and short-term inflation signals that much work remains. A well-coordinated blend of fiscal, monetary, and structural reforms will be crucial in guiding the economy toward long-term stability.”
