By Seun Ibiyemi
The Centre for the Promotion of Private Enterprise (CPPE) has called for further monetary easing and urgent reforms to reduce food, energy and transportation costs following a decline in Nigeria’s headline inflation rate to 14.63 per cent in September 2026.
The latest inflation figure represents a 76-basis-point decline from 15.39 per cent recorded in August, reinforcing the country’s disinflationary trend and improving prospects for investment, economic recovery and lower borrowing costs.
However, the CPPE warned that persistent food inflation, rising monthly energy prices and renewed pressure on core inflation could undermine the gains if the government fails to address structural challenges affecting production and distribution costs.
In a policy brief issued on Thursday, the organisation’s Chief Executive Officer, Dr Muda Yusuf, said the moderation in headline inflation and the decline in core inflation from 13.29 per cent to 12.95 per cent had strengthened the case for further interest rate reductions.
He said lower inflation, supported by relative stability in the foreign exchange market, could create room for monetary easing to improve access to credit and stimulate private-sector investment.
According to Yusuf, high borrowing costs have constrained manufacturing, agriculture, construction, distributive trade and micro, small and medium-sized enterprises (MSMEs).
He argued that a sustained reduction in interest rates would lower financing costs, ease working-capital pressures and support investment in productive activities.
However, he cautioned that monetary easing should be gradual and guided by inflation expectations, exchange rate conditions and emerging energy-price risks to preserve macroeconomic stability.
Despite the decline in headline inflation, the CPPE identified food prices as a major threat to household welfare and consumer demand.
Annual food inflation edged up from 19.57 per cent in August to 19.59 per cent in September, exceeding headline inflation by 4.96 percentage points.
Yusuf said the development was particularly concerning because food accounts for a significant proportion of expenditure among low-income households.
He explained that persistent food inflation reduces purchasing power, increases poverty risks and forces households to devote more of their incomes to basic necessities at the expense of manufactured goods, education, healthcare and other services.
The resulting decline in discretionary spending, he added, could weaken consumer demand and hurt businesses, particularly those dependent on household consumption.
The CPPE attributed persistent food-price pressures to insecurity in farming communities, inadequate rural infrastructure, high logistics costs, post-harvest losses and inefficient agricultural market connections.
It therefore urged the government to prioritise agricultural productivity, security, storage facilities and distribution networks rather than rely predominantly on monetary tightening to control food prices.
The organisation also expressed concern over the sharp acceleration in monthly energy inflation, which rose from 0.36 per cent in August to 5.38 per cent in September. Year-on-year energy inflation stood at 10.85 per cent.
According to Yusuf, higher petrol, diesel and gas prices increase transportation, distribution and production costs across the economy, potentially triggering further increases in food prices and underlying inflation.
He warned that volatility in international petroleum markets, heightened by the geopolitical crisis in the Middle East, exposed Nigeria to external energy-price shocks.
Although exchange rate stability could moderate imported inflation, he said it could not fully offset increases in global energy prices.
The CPPE called for stronger domestic energy resilience through improved electricity supply, expanded compressed natural gas (CNG) infrastructure, greater adoption of electric mobility and more efficient domestic refining.
The policy brief also highlighted geographical disparities in inflation, noting that urban inflation exceeded rural inflation by 3.18 percentage points.
Yusuf said the difference reflected varying logistics costs, market access, local supply conditions and consumption patterns.
He urged federal, state and local governments to improve inter-state connectivity, rural feeder roads, storage infrastructure, agricultural markets and security to reduce distribution costs and strengthen domestic supply chains.
The organisation also called for the elimination of multiple levies and checkpoints that increase the cost of moving goods across states.
According to the CPPE, state and local governments have important responsibilities in implementing reforms that improve market access and reduce the cost of doing business.
Assessing the implications for investors, the CPPE said the moderation in inflation offered a more favourable environment for financial planning, investment decisions and potential interest rate reductions.
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It noted that the Central Bank of Nigeria’s September reduction of the Monetary Policy Rate by 350 basis points to 23 per cent provided a foundation for further easing, although the effect on commercial lending rates could take time to materialise.
However, the organisation cautioned that lower annual inflation did not necessarily translate into declining operating costs for businesses.
It pointed to the increase in monthly core inflation from -0.06 per cent in August to 1.11 per cent in September as evidence that underlying price pressures had not been fully contained.
Consequently, businesses continue to face high energy and logistics costs alongside pressure on consumer purchasing power, despite improvements in the broader inflation outlook.
The CPPE advised investors to distinguish between declining inflation and falling operating expenses, noting that lower production costs would be essential for improving profitability, competitiveness and sustainable investment.
To consolidate the disinflationary trend, the organisation recommended sustained but prudent monetary easing, improved food affordability, lower energy costs and reforms to ease supply-side constraints in agriculture, agribusiness and manufacturing.
It also called for increased investment in roads, storage and transport infrastructure, alongside measures to eliminate unnecessary charges that raise the cost of moving goods.
The CPPE urged the three tiers of government to coordinate policies focused on productivity, infrastructure, security, energy efficiency and domestic supply capacity.
In his conclusion, Yusuf described the September inflation report as credible evidence of progress in macroeconomic stabilisation but warned that the gains remained fragile.
He noted that monthly headline inflation fell from 0.71 per cent in August to 0.06 per cent in September, while monthly food inflation declined to -1.55 per cent.
Nevertheless, he said the persistence of elevated annual food inflation, the sharp rise in monthly energy inflation and renewed monthly core inflation pressures underscored the need for complementary structural reforms.
“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 policy brief stated.
