Nigeria has been faced with the most complicated form of inflation, where all the possible types are evident at the same time, said a development economist, Ken Ife.
Ife, who appeared on Channels Television’s The Morning Brief on Monday, October 20, described the current inflation pressure as a complex case of stagflation, a rare economic condition.
He explained that, unlike other economies where only one or two inflation types are evident at a time, Nigeria is facing all four types of inflation simultaneously, making its economic recovery difficult.
“What we have is not a straightforward inflation. I’ve said many times that what we have is stagflation, and stagflation is the most complicated form of inflation where all the possible types of inflation are active simultaneously. Rarely do you have it in other economies, but in our case, all four are happening at once,” Ife, a professor, said.
Pinnacle Daily reports that Nigeria’s headline inflation fell for the sixth consecutive month in a row to 18.02 per cent in September, its lowest level in more than three years.
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The deceleration in inflation comes after the rebasing of the Consumer Price Index earlier this year by the National Bureau of Statistics.
The rebasing exercise has seen headline inflation, which had peaked at nearly 35 per cent as of December 2024, currently declining to 18.02 per cent.
Highlighting the various types of inflation Nigeria is facing, Ife identified the first type as demand-pull inflation, which he explained is driven by excess liquidity and massive cash flow chasing fewer goods and services.
He stressed that the monetary authorities have been “sucking liquidity” through inflation-targeting policies to address the challenge, but to no avail, as money in circulation is not backed by productivity gains.
“You can print money, but you print it under some conditions: either someone has sent in $20 billion into your economy, or there’s a massive productivity gain. None of these is the case; we’re just printing inflation,” Ife explained.
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He identified the second type as cost-push or structural inflation, which is linked to the rising cost of transportation, energy, and insecurity.
This continues to affect the production and distribution of goods, particularly food, he said.
He identified imported inflation as another major type of inflation driver, noting that Nigeria’s heavy dependence on imports makes it vulnerable to global disruptions like the COVID-19 pandemic and the Russia-Ukraine crisis.
“We have gas and oil, but Russia controls 40% of the gas to Europe. When they turned down that tap, prices went high. We are Europe’s second trading partner, so all we are importing from there is inflation,” Ife stated.
The fourth type of inflation, which he said is rarely discussed, stems from regional food demand and currency devaluation.
He said the country’s food exports to neighbouring countries like Niger, Chad, and Mali, mostly paid for in naira, have worsened domestic food inflation due to exchange rate differentials.
“We are feeding 300 million people, not 230 million. Our neighbours depend on us for food, and when you go out to these countries, one naira can no longer buy one CFA; it buys 0.7 CFA. Apples I buy here for ₦800 cost ₦3,000 at Seme Border. That shows an 80% devaluation,” Ife explained.
The economist stressed that the cross-border demand allows traders to make up to 200 per cent profit, putting more pressure on domestic food prices.
While Nigeria has seen a slight drop in food inflation recently due to increased imports, Ife added that the underlying structural issues of production, currency weakness, and import dependence remain unresolved, making inflation a persistent challenge for policymakers.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X
