CPPE explains reasons behind Nigeria’s inflation decline to 18.02% in September

The Centre for the Promotion of Private Enterprise, (CPPE), has explained that Nigeria’s inflation dropped for the sixth consecutive time in September 2025 to 18.02 per cent, down from 20.12 per cent in August, due to a combination of structural and macroeconomic factors.

Director/Chief Executive Officer, CPPE, Dr.  Muda Yusuf, made this known in a statement while reacting to Nigeria’s latest inflation figures, adding that the country is experiencing disinflation because of increased food supply resulting from the harvest season, the base effect of inflation, improved exchange rate stability, and better coordination between fiscal and monetary authorities.

The Centre explained that the decline in inflation suggests that inflationary pressures are gradually subsiding and that recent policy measures are beginning to yield results.

According to the CPPE statement: “Increased food supply during the harvest season has moderated food prices. Also, the base effect of inflation rates in 2024 averaged above 30 per cent, creating a high statistical base that supports a relative decline in current inflation readings; the naira has experienced relative stability — and mild appreciation in some months — helping to moderate imported inflation; macroeconomic policy improvements through tighter monetary policy, reduced fiscal leakages, and better coordination between fiscal and monetary authorities have contributed to easing inflationary pressures.

“These factors collectively explain the progress made on price moderation, though the underlying structural issues that drive cost-push inflation remain significant.”

CPPE, however, clarified that the counter inflation levels remain high and continue to erode household purchasing power, undermine consumer confidence, and weaken real incomes.

While this disinflation trajectory is commendable, inflation levels remain high and continue to erode household purchasing power, undermine consumer confidence, and weaken real incomes. The gains achieved so far must therefore be consolidated through decisive and well-targeted policy actions.

The statement from the Centre read: Key Drivers of Disinflation

The current disinflation has been shaped by a combination of structural and macroeconomic factors, including:

• Seasonality of agricultural output: Increased food supply during the harvest season has moderated food prices.
• Base effect: Inflation rates in 2024 averaged above 30%, creating a high statistical base that supports a relative decline in current inflation readings.
• Improved exchange rate stability: The naira has experienced relative stability — and mild appreciation in some months — helping to moderate imported inflation.
• Macroeconomic policy improvements: Tighter monetary policy, reduced fiscal leakages, and better coordination between fiscal and monetary authorities have contributed to easing inflationary pressures.

These factors collectively explain the progress made on price moderation, though the underlying structural issues that drive cost-push inflation remain significant.

On Persistent Inflation Drivers, it noted that despite the moderation, inflation remains high in key consumption and production sectors. The major cost drivers include:

• Food and agriculture: Persistent insecurity in farming areas, high transport costs, and climate-related disruptions continue to constrain food output.
• Transport and logistics: High fuel prices, poor road networks, and multiple levies across states inflate distribution costs.
• Energy and utilities: Unreliable electricity supply and high energy costs raise the cost of production across sectors.
• Housing, education, and healthcare: Continued escalation in these essential services sustains upward pressure on living costs.

Collectively, it stated that these sectors account for almost 90% of household expenditure, magnifying their impact on the overall inflation trajectory.

On policy recommendations to moderate inflation, the Centre mulled that to consolidate the current gains and sustain the disinflation momentum, and recommends the following strategic policy interventions:

To enhance food security and agricultural productivity, it harped on the need to:

o    Strengthen security in farming regions to facilitate production and market access.

o    Expand irrigation and storage infrastructure to stabilize food supply across seasons.

o    Promote mechanization and input access through targeted support programs.

In order to reduce logistics and transport costs, it recommended:

o    Rehabilitate key federal and state transport corridors.

o    Streamline checkpoints and eliminate informal levies on inter-state movement.

o    Improve intermodal connectivity to reduce travel time and costs.

To address energy and production costs, it recommended:

o    Implement transitional energy support schemes for productive sectors.

o    Promote investments in renewable and off-grid power to enhance reliability.

o    Enforce efficiency in the electricity value chain to lower tariffs and improve supply.

In order to expand access to affordable finance, it recommended:

o    Deepen credit guarantees and concessional financing for SMEs and the real sector.

o    Strengthen the development finance institutions’ role in channeling funds to productive enterprises.

On reform port and trade logistics, the Centre recommended:

o    Simplify international trade processes and eliminate multiple agency checkpoints.

o    Digitize clearance procedures to reduce time and costs.

o    Harmonize port charges and enforce transparency in the port value chain.

To achieve a sustained macroeconomic stability it urged that they “Maintain exchange rate stability through credible market-based mechanisms; Strengthen coordination between fiscal and monetary authorities to prevent policy contradictions and guard against fiscal slippages that could re-ignite inflationary pressures.

In conclusion, the Centre noted that “the sustained disinflation trend is a welcome development and a sign of improving macroeconomic fundamentals. However, the cost-of-living crisis remains acute, particularly for low- and middle-income households. The next phase of reform must therefore prioritize welfare-focused and cost-reduction measures that deliver tangible relief to citizens.

“Business confidence is rising, but consumer confidence remains fragile. Policies that enhance productivity, stabilize prices, and reduce the structural cost of doing business will not only strengthen the disinflation trajectory but also foster inclusive and sustainable economic recovery.

“With consistency, coordination, and structural reforms, Nigeria can achieve a stable single-digit inflation rate over the medium term — anchoring growth, improving welfare, and restoring confidence in the economy.”