Market News
Economists worry fresh inflation fears may alter CBN’s policy plan - THE GUARDIAN
By : Helen Oji, Joesph Chibueze
•Analysis puts May headline figure at 16.02%
There are fresh concerns among economists about the appropriate policy option before the Central Bank of Nigeria (CBN) and whether it would be premature to jettison the cautious rate cut programme, with headline inflation edging up gradually.
The CBN had cut the monetary policy rate (MPR) amidst sustained decelerating inflation rates. But the resurging inflation, which has climbed up to 15.69 per cent last month, has changed the discussion about inflation and interest rates.
Whereas an extended high interest rate hold or hike could be tempting, the Centre for the Promotion of Private Enterprise (CPPE) has warned that monetary tightening alone cannot resolve a high inflation that is driven by energy costs, logistics inefficiencies, food supply disruptions and weak infrastructure conditions.
The National Bureau of Statistics (NBS), in its April 2026 Consumer Price Index (CPI) report released on Friday, showed that headline inflation rose for the second consecutive month from 15.38 per cent in March 2026 to 15.69 per cent in April.
The rate, according to the NBS, was driven by food and energy prices. The April inflation figures are also higher than the CBN’s own 2026 full-year projection of 12.94 per cent, by 2.75 per cent.
The Monetary Policy Committee (MPC) of the CBN is expected to begin its meeting tomorrow, during which drivers of the current high inflation expectation will be discussed. At the February meeting, the committee reduced the MPR by 50 basis points to bring the anchor down to 26.5 per cent.
The hostilities in the Middle East have forced global oil and logistics prices up sharply.
Reacting to the April inflation figures, the Chief Executive Officer of CPPE, Dr Muda Yusuf, said even though the headline inflation rose marginally from 15.38 per cent in March to 15.69 per cent in April, the pace of acceleration was relatively moderate.
He said the moderation in the month-on-month inflation metrics across virtually all major indicators is encouraging.
“Headline month-on-month inflation declined by 2.05 per cent, food inflation eased by 0.54 per cent, core inflation declined by three per cent, urban inflation moderated by 1.3 per cent, while rural inflation dropped sharply by 3.9 per cent. This suggests a weakening in short-term inflationary momentum,” he said.
Yusuf, however, observed that inflation conditions remain severe from welfare and business cost perspectives.
“Food inflation stood at 16.06 per cent, while core inflation remained elevated at 15.86 per cent”, he noted, adding that the dominant inflation drivers continue to be food, transportation, energy products, healthcare and restaurant services, which together accounted for about 87 per cent of the inflation pressure recorded in April.
“These are essential expenditure items which absorb the bulk of household income, particularly among low-income Nigerians”, he said.
He said the policy priority should shift more decisively towards supply-side interventions, adding that governments at both the federal and state levels should intensify measures to reduce energy costs, improve transportation infrastructure, strengthen food supply systems, enhance trade facilitation, and support domestic productivity.
“Firms should prioritise energy efficiency, dynamic pricing models, consumer segmentation and affordability-driven product strategies, including smaller pack sizes, as consumers become increasingly price-sensitive and discretionary spending weakens”, Yusuf said.
Meanwhile, analysts at Cowry Research projected headline inflation to rise to 16.02 per cent in May.
The analysts said while inflationary pressures remain widespread across the economy, improving harvest conditions, weaker consumer demand and slower increases in food prices are beginning to provide some relief after months of sustained price shocks.
Cowry Research expects the MPC to maintain rates at current levels as policymakers continue to assess inflation developments, global commodity prices and broader macroeconomic conditions before considering any further policy adjustments.
