Prices of goods still high despite drop in inflation – CPPE

The Centre for the Promotion of Private Enterprise (CPPE) on Tuesday cautioned that a drastic reduction in inflation figures does not equate to a decrease in the overall price level of goods and commodities.

In a statement signed by Dr. Muda Yusuf, the CPPE warned that while the sharp deceleration in inflation should be acknowledged, it must be celebrated with caution, as high prices remain a significant factor affecting the cost of doing business, the cost of living, and poverty levels in the country.

According to the CPPE, “The sharp decline in the headline inflation rate from 34.8% in December 2024 to 24.48% in January 2025, along with the drop in food inflation from 39.8% to 26.08% and the decrease in core inflation from 29.28% to 22.59%, was not unexpected given the revision of the computation base year from 2009 to 2024.

“Additionally, the inflation figures reflect a strong base effect due to the high inflation regime in 2024, which significantly impacted year-on-year inflation outcomes.

“Furthermore, transaction demand in December 2024 was notably high due to festive spending, whereas in January, spending momentum predictably slowed due to reduced disposable incomes following intense expenditures in the previous month. These factors help explain the sharp deceleration in inflation figures for January 2025.

“However, it is crucial to clarify that a drastic reduction in inflation figures does not imply a reduction in price levels. Inflation reduction merely indicates a slowdown in the rate of price increases, not an actual decline in prices. Thus, the sharp drop in inflation should be viewed cautiously, as high prices persist and continue to impact businesses, households, and overall economic well-being.

“Households and businesses remain burdened by high energy costs, the depreciation of the naira, high interest rates, import costs, transportation expenses, and security challenges. It is imperative for the government to recalibrate its strategies to address these critical cost drivers.

“At this time, what businesses and households truly seek is a reduction in overall price levels from the extremely high rates seen in 2024 to a more moderate level in 2025—technically referred to as disinflation.

“The good news, however, is that there are early signs of such reductions in PMS, diesel, certain food items, and pharmaceutical products. It is hoped that this trend will be sustained throughout the year.”