SAT OCT 17 2026-theGBJournal| Nigeria’s progress in curbing inflation faces fresh risks from rising energy costs and sharp regional price disparities, the Centre for the Promotion of Private Enterprise (CPPE) said, warning that structural supply constraints could undermine recent gains in price stability.
Headline inflation eased to 14.63% in September from 15.39% in August, while monthly inflation slowed to 0.06% from 0.71%, according to data cited by the business policy group. But a sharp acceleration in monthly energy inflation and persistently high food prices point to continuing cost pressures across the economy.
Monthly energy inflation jumped to 5.38% in September from 0.36% a month earlier, while annual energy inflation stood at 10.85%, the CPPE said in a policy brief.
The increase threatens to complicate the disinflation process because higher fuel, gas and electricity costs feed into transportation, food distribution and industrial production, potentially reversing some of the recent improvement in consumer prices.
The group attributed the heightened exposure to energy-price volatility partly to geopolitical tensions in the Middle East, which have increased uncertainty in global petroleum markets.
Although relative stability in the foreign exchange market has helped contain imported inflation, the CPPE said it could not fully shield Nigeria from rising international energy costs.
“The policy priority should therefore be to strengthen domestic energy resilience,” the group said, calling for more reliable electricity, expanded compressed natural gas infrastructure, greater adoption of electric mobility and improved domestic refining efficiency.
FOOD COSTS REMAIN ELEVATED
Food prices remain another major obstacle to a sustained improvement in living standards, with annual food inflation edging up to 19.59% in September from 19.57% in August.
Food inflation exceeded the headline rate by 4.96 percentage points, highlighting the disproportionate burden on lower-income households, which spend a larger share of their earnings on essential goods.
The CPPE said persistent food-price pressures reflected structural weaknesses in agricultural production and distribution, including insecurity, inadequate rural infrastructure, high logistics costs and post-harvest losses.
The squeeze on household purchasing power also threatens businesses by reducing the money available for manufactured goods, healthcare, education and other services.
The group argued that addressing food inflation would require measures to improve agricultural productivity and distribution networks rather than relying predominantly on monetary tightening.
REGIONAL DISPARITIES EXPOSE SUPPLY BOTTLENECKS
Differences in inflation between urban and rural areas further highlight the structural challenges facing policymakers.
Urban inflation exceeded rural inflation by 3.18 percentage points, according to the CPPE, which linked the disparity to differences in logistics costs, market access, local supply conditions and consumption patterns.
The gap suggests that the benefits of easing inflation are unevenly distributed and that the cost of moving goods across domestic markets remains an important part of Nigeria’s price problem.
The group called for improved inter-state connectivity, rural feeder roads, storage facilities, agricultural market infrastructure and stronger security to reduce distribution costs.
It also urged state and local governments to take greater responsibility for tackling supply bottlenecks, arguing that inflation management requires coordinated action beyond federal monetary policy.
RATE CUTS IN FOCUS
The moderation in headline and core inflation strengthens the case for further interest-rate reductions, the CPPE said, pointing to the high cost of credit as a constraint on investment, working capital and productive capacity.
The Central Bank of Nigeria cut its benchmark interest rate by 350 basis points to 23% in September, according to the policy brief.
Further monetary easing could support manufacturers, agricultural businesses and small and medium-sized enterprises, although the group cautioned that decisions should remain sensitive to inflation expectations, exchange-rate conditions and emerging energy-price risks.
The inflation picture also contains signs that underlying pressures have not fully subsided. Annual core inflation declined to 12.95% from 13.29%, but monthly core inflation rose to 1.11% in September from minus 0.06% in August.
The divergence underscores the challenge facing policymakers: falling annual inflation does not necessarily mean that businesses are experiencing lower operating costs.
The CPPE urged authorities to combine prudent monetary easing with structural reforms targeting energy, food production, transport infrastructure and domestic supply capacity.
The September data provide evidence of progress in stabilising prices, but the group warned that the gains remain vulnerable unless the underlying costs of producing and distributing goods are reduced.
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