Yemisi Izuora
The Centre for the Promotion of Private Enterprise (CPPE) has identified Nigeria’s inflation slowdown from rising energy costs, warning that the country’s recent disinflationary gains could be reversed if pressure from fuel and power prices persists.
The Chief Executive Officer (CEO) of the Center Muda Yusuf (PhD)
said the latest inflation print still points to a continuation of the disinflation trajectory, with headline inflation decelerating to 14.63 per cent in September from above 15 per cent in August. He linked that moderation to a broader pattern of macroeconomic stability, but cautioned that the improvement does not yet amount to meaningful relief for many households.
“The biggest spike month on month came from energy,” Yusuf said. He noted that energy inflation accelerated from less than 1 per cent to 5.38 per cent a sharp increase that could feed through transportation, production and operating costs across the economy.
That pass-through effect matters because energy costs shape the price of nearly every essential good and service. Higher fuel and power bills can lift logistics charges, factory costs and retail prices, adding pressure to households already facing elevated food prices.
Food inflation remained at 19.59%, well above the headline rate, which Yusuf described as a sign that cost-of-living stress remains acute for ordinary Nigerians. He said the divergence between the broader inflation figure and food prices highlights where welfare pressure is most concentrated.
“If you have headline inflation at slightly over 14% and we’re having food inflation at 19.59%, that shows that there’s still a whole lot of work that needs to be done around food inflation,” Yusuf said on CNBC Africa.
He identified transportation, energy and food as the main pressure points for consumers, arguing that those categories have the greatest direct effect on household welfare. In that context, a slower pace of headline inflation does not automatically translate into an easier cost environment for the average family.
On possible interventions over the next three to six months, Yusuf said policymakers should prioritize measures that lower transportation and logistics costs while also addressing the cost of farm inputs. He said feedback from the agricultural sector points to a significant rise in the prices of fertilizer, agrochemicals, seedlings and machinery.
Many of those inputs are import dependent and carry a large foreign-exchange component, making them more expensive when currency pressures persist. Yusuf said one policy option would be for the federal government and subnational governments to support or subsidize agricultural input costs in order to ease food inflation.
He also pointed to insecurity as a major supply-side constraint. According to Yusuf, insecurity has reduced agricultural output by keeping farmers away from their land, and that decline in supply has in turn pushed prices higher.
“Once supply drops, prices go up,” he said, adding that getting more people safely back to farms would be one of the quickest ways to improve food supply conditions.
The discussion also turned to the government’s approach to energy relief and whether recent interventions could evolve into a broader subsidy framework. Yusuf said the current NNPC discount arrangement provides some relief, but he drew a clear distinction between that mechanism and the previous nationwide fuel subsidy regime.
He said the earlier subsidy model is not fiscally sustainable and should not be restored. According to Yusuf, returning to that system would require at least 20 trillion naira ($12.99 billion), a sum he said the government cannot reasonably mobilize.
Yusuf said the NNPC discount window covers about 170 million liters per month, which he estimated at roughly 5% of total PMS consumption. By contrast, he said Nigeria’s daily PMS consumption is about 50 million liters, meaning a full restoration of subsidy would amount to subsidizing the country’s entire petrol demand every day.
“So there’s a whole lot of difference between what the NNPC is proposing and what the traditional form of subsidy was,” Yusuf said. “The traditional form, of course, is not sustainable because we don’t have the finances to support that.”
His comments suggest policymakers are likely to keep favoring narrower, targeted interventions rather than returning to a blanket support system that would sharply increase fiscal strain. That position also aligns with broader concerns around budget discipline at a time when Nigeria is trying to preserve macroeconomic stability.
Looking beyond inflation, Yusuf said the biggest risks to Nigeria’s outlook through year-end and into 2027 are political and geopolitical. He said investors tend to become more cautious during political transition periods because of uncertainty over the policy direction.
He also warned that geopolitical risks remain a major source of pressure, particularly through the energy channel. Rising global energy costs can increase domestic business expenses and worsen pressure on consumers, especially in an economy where transport and production are highly sensitive to fuel prices.
Even so, Yusuf said Nigeria’s current macroeconomic position gives it some capacity to absorb shocks. He argued that recent improvements in stability provide at least some room for policymakers and businesses to manage the impact of external and domestic risks.
The outlook for inflation, however, will likely hinge on whether authorities can contain energy-driven cost pressures while improving food supply conditions. For investors and households alike, the next few months may show whether Nigeria’s disinflation trend can be sustained or whether higher energy prices begin to undo the recent progress