The Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, has called on the government to focus on tackling the structural factors driving inflation in Nigeria rather than relying solely on monetary policy measures.
He made the call on Monday in a policy brief on the country’s inflation report for May 2026, following a marginal increase in headline inflation from 15.69 per cent in April to 15.93 per cent in May.
He stressed that insecurity, food supply challenges, high transportation costs and rising energy prices remain the key drivers of persistent price pressures across the economy.
He noted that while recent geopolitical tensions in the Middle East contributed to the increase through higher crude oil prices, rising marine insurance costs, disruptions to shipping routes and increased import costs, the deeper challenge remains domestic structural weaknesses that continue to push up production and distribution costs.
“The inflation challenge remains largely cost-push in nature. Accordingly, the solution lies less in monetary tightening and more in addressing the structural drivers of production and distribution costs,” Yusuf, a renowned economist, said.
He explained that food, transportation, housing, energy, health and education account for about 87 per cent of headline inflation, highlighting the concentration of inflationary pressures in goods and services that are essential to everyday life.
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Yusuf noted that food inflation remained a major concern at 16.96 per cent, exceeding the headline inflation rate and further eroding household purchasing power.
He identified insecurity in key agricultural areas as one of the most significant factors behind rising food prices, saying it has displaced farmers, reduced cultivated land, disrupted supply chains and increased transportation costs.
“A major structural factor behind elevated food prices is the persistent insecurity in key food-producing regions,” Yusuf said.
“Insecurity has displaced farming communities, reduced cultivated acreage, disrupted agricultural supply chains and increased transportation costs.”
According to him, the resulting decline in agricultural output and tighter food supplies have continued to fuel food inflation across the country.
“Therefore, tackling insecurity is not only a security imperative; it is also a critical inflation-management strategy,” Yusuf added.
The economist called for targeted government intervention to address the underlying cost drivers of inflation, stressing that efforts should focus on improving food security, strengthening logistics infrastructure, investing in mass transit and rail transportation, enhancing energy security and restoring safety in farming communities.
“The policy priority should therefore be to tackle the structural cost drivers of inflation, particularly insecurity, food supply constraints, transportation costs and energy prices,” he said.
“These are the pressure points that matter most to citizens’ welfare and business competitiveness.”
Despite the increase in annual inflation, Yusuf said there were signs of improvement beneath the headline figures.
He noted that headline inflation slowed on a month-on-month basis from 2.13 per cent in April to 1.75 per cent in May, while food inflation eased from 3.63 per cent to 2.98 per cent over the same period.
He also pointed out that the current inflation rate remains significantly lower than the 26.06 per cent recorded in May 2025, reflecting what he described as substantial disinflation over the past year.
Yusuf further stressed that easing geopolitical tensions in the Middle East and the moderation in crude oil prices from about $90 per barrel to around $83 per barrel offer grounds for cautious optimism that inflationary pressures could begin to ease from the third quarter of 2026 if current trends are sustained.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X