Why cost of living still tough on Nigerians despite strong drop in inflation – CPPE

Nigeria’s headline inflation eased to 16.05 percent in October, yet millions of households are still contending with a severe cost-of-living squeeze, according to the Centre for the Promotion of Private Enterprise (CPPE). The group said the disinflation is a welcome macroeconomic milestone, but everyday prices for essentials remain stubbornly high.

Disinflation, but pressure persists

CPPE noted that October’s figures reflect improving stability—supported by calmer exchange rate conditions, better policy coordination, and strong base effects. However, the organisation cautioned that the relief has not translated into meaningful improvements for households because structural price pressures are still elevated.

“It’s a significant step for stability, but the impact on welfare is limited as underlying cost drivers remain strong,” CPPE’s chief executive, Yusuf, explained.

Where households feel it most

CPPE highlighted that the categories with the biggest impact on family budgets—food, transportation, housing, electricity, education and healthcare—collectively accounted for about 84 percent of the inflation burden in October. This concentration keeps living costs high even as headline inflation cools.

• Food: While food inflation fell from 16.87 percent in September to 13.12 percent in October, month-on-month food prices still edged higher, limiting relief for households.
• Transport: Elevated fuel and logistics costs continue to feed into fares and goods distribution.
• Housing and electricity: Persistent utility and accommodation costs weigh heavily on urban and low-income households.
• Education and health: Fees and medical expenses remain sticky, adding to household stress.

Why inflation dropped

CPPE attributed the sharp disinflation to three main factors:

• Base effects: With October 2024 inflation at about 33.8 percent, the year-on-year comparison for October shows a much lower rate.
• Exchange rate gains: A modest naira appreciation tempered imported inflation and eased pricing pressures on tradables.
• Policy actions: Monetary tightening, improved foreign exchange liquidity and reduced speculation helped stabilise prices.

What should happen next

To sustain gains and make life more affordable, CPPE called for urgent, practical interventions that tackle the real economy constraints behind sticky prices:

• Boost food supply: Expand irrigation, storage and processing capacity to cut post-harvest losses and stabilise prices.
• Secure farming communities: Strengthen security to restore production in key agricultural belts.
• Fix logistics bottlenecks: Prioritise critical federal highways and expand freight rail to lower transport costs.
• Deepen FX stability: Maintain liquidity and transparency to keep imported inflation in check.
• Target energy costs: Support reliable and affordable power for households and small businesses.

The bottom line

CPPE described the October drop as a “big win for stability,” but stressed that genuine relief will only come when prices of food, transport, housing and energy decline meaningfully. Disinflation alone will not ease the cost of living without deeper structural reforms.

“Disinflation is good news, but without sustained reforms, ordinary Nigerians will not feel the difference,” Yusuf said, urging policymakers to double down so the current trend not only holds but translates into tangible benefits for homes and businesses across the country.