CPPE chief says food price plunge marks real disinflation, urges balanced policy response to protect farmers and sustain recovery….
Nigeria’s inflation rate slowed sharply in January 2026, with new data pointing to what economists describe as a meaningful shift in the country’s price dynamics.
Reacting to the latest Consumer Price Index released by the National Bureau of Statistics (NBS), Dr. Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), said the figures signal a significant moderation in inflation pressures with wide-ranging implications for households, investors and policymakers.
Headline inflation declined to 15.10 percent year-on-year in January 2026, compared with 27.61 percent in January 2025 and 15.15 percent in December 2025. On a month-on-month basis, inflation contracted by 2.88 percent, indicating an actual easing in the general price level relative to December.
Describing the development as an important macroeconomic shift, Muda Yusuf said the moderation carries implications for household welfare, agricultural income sustainability, monetary policy direction and private-sector investment strategy.
Food Prices Lead the Decline
According to the NBS data, food inflation fell sharply to 8.89 percent year-on-year, down from 29.63 percent in January 2025 and 10.84 percent in December 2025. Month-on-month food inflation dropped by 6.02 percent, largely reflecting declines in staple food prices.
Core inflation also moderated to 17.72 percent year-on-year from 18.63 percent in December 2025, suggesting that the easing trend is extending beyond food into other components of the consumption basket, even though underlying structural pressures remain elevated.
Urban inflation declined to 15.36 percent while rural inflation fell to 14.44 percent, underscoring the geographically widespread nature of the disinflation trend.
Muda Yusuf said the broad-based decline indicates genuine disinflation rather than temporary price volatility.
Relief for Households, Boost for Demand
The CPPE boss noted that the sharp moderation in food inflation carries significant welfare benefits because food accounts for the largest share of household spending in Nigeria.
He explained that lower food prices are expected to improve real purchasing power, especially for low-income households, reduce poverty and food-security pressures, and gradually support recovery in demand for non-food goods and services.
If sustained, he said, the trend could stimulate retail trade, boost manufacturing utilisation and strengthen service-sector activity, thereby supporting broader economic recovery.
Warning Over Farmers’ Incomes
However, Muda Yusuf cautioned that while falling food prices benefit consumers, they could pose risks for farmers and rural economies.
He warned that sustained weakness in farm-gate prices may reduce farmers’ revenues and investment capacity, weaken rural purchasing power and discourage agricultural production, potentially creating future supply shortages and renewed inflation pressures.
He stressed the need for policymakers to balance consumer affordability with producer sustainability to safeguard national food security.
Policy Direction
On monetary policy, Muda Yusuf said the disinflation trend creates room for cautious and gradual easing, but emphasised that decisions must remain data-driven given that core inflation and the twelve-month average inflation rate remain elevated.
He also called for targeted government measures to protect farm incomes while sustaining food affordability, including productivity support, minimum guaranteed prices for selected crops, strengthening strategic reserves and expanding agro-processing capacity to absorb surplus output.
Highlighting state-level disparities, he noted that headline inflation is highest in Benue, Kogi and the Federal Capital Territory, and lowest in Ebonyi, Katsina and Imo. He said these variations reflect the impact of logistics costs, security conditions and supply-chain efficiency on price formation.
Addressing these structural constraints, he argued, is critical for achieving durable nationwide price stability.
Investor and Business Implications
For investors and businesses, Muda Yusuf said easing inflation, particularly food inflation, signals gradual recovery in real household demand, creating opportunities in consumer goods, retail, logistics and services.
At the same time, he noted that slower price growth reduces the ability of firms to rely on price increases for revenue expansion, making cost efficiency, productivity and scale more important.
In agriculture, he said lower primary food prices may compress margins in crop production but could strengthen the case for investment in storage, processing, cold chains and export-oriented agribusiness.
He added that sustained disinflation could support gradual interest-rate moderation and improved equity valuations, favouring long-term productive investment over short-term inflation hedging.
According to Muda Yusuf, Nigeria’s January 2026 inflation outcome represents a meaningful transition toward macroeconomic stabilisation, driven primarily by declining food prices and supported by easing core inflation.
He maintained that the key policy priority is to consolidate disinflation while protecting agricultural productivity and rural livelihoods, noting that striking this balance will be essential to transforming current price moderation into durable stability, inclusive growth and stronger investor confidence in the economy.
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