Monetary tightening will hurt investment in real economy, says Dr. Yusuf

• Food, transportation spike inflation in March

The Centre for the Promotion of Private Enterprise (CPPE), yesterday warned against the current inflationary pressures are predominantly cost-push in nature, driven by energy, logistics and structural inefficiencies and not excess demand.
The Group, a policy and economic think-tank body, therefore cautioned against using the recent uptick in inflation as a basis for additional monetary tightening. It noted that further monetary tightening would be ineffective in addressing the root causes of inflation, high interest rates would hurt economic growth, investment and productivity; while the real sector would face increased financing constraints, undermining recovery efforts.
Reacting to the March Consumer Price Index (CPI) report released by the National Bureau of Statistics (NBS), the CPPE boss, Dr. Muda Yusuf, described as worrisome the latest inflation data, describing it as a signaling a worrying resurgence of inflationary pressures, particularly on a month-on-month basis.
He said that while recent months have reflected a gradual moderation in year-on-year inflation, the release of the March CPI report gives a cause for concern given that headline inflation edged up to 15.38 per cent in March, while month-on-month inflation accelerated sharply to 4.18 per cent, nearly double the level recorded in February.
This development, Yusuf argued, underscores the fragility of the disinflation process and raises concerns about renewed cost pressures in the economy.
“The March 2026 CPI report highlights a critical development in Nigeria’s inflation trajectory, where the earlier gains in disinflation are now being threatened by a resurgence of cost-driven pressures, particularly from energy, food and transportation.
“This emerging trend suggests that while inflation had been moderating on a year-on-year basis, underlying structural vulnerabilities remain largely unresolved, with recent month-on-month increases pointing to renewed price momentum.
“The situation calls for urgent and targeted policy responses, as failure to address these supply-side drivers could reverse the fragile stability achieved and deepen the cost-of-living challenges facing households and businesses.
“While disinflation trends remain evident on a year-on-year basis, the resurgence of monthly inflation pressures signals that macroeconomic stability is still fragile. The policy response must therefore shift from a narrow focus on monetary tools to a broader strategy that addresses the structural drivers of inflation, particularly in energy, food and transportation.
“Without decisive action in these areas, the gains recorded in inflation moderation may prove temporary, while households and businesses continue to grapple with significant cost pressures,” Yusuf said.
Yusuf, who also doubles as the Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE), noted that the recent uptick in inflation is largely reflective of renewed energy price pressures, which continue to permeate production, transportation and distribution costs across the economy.
Insisting that energy remains a critical cost driver in the country, given the persistent reliance on gas, diesel and petrol for power generation, logistics and industrial operations, Yusuf noted the implications of the development as “far-reaching.” Specifically, he pointed out that rising energy costs are quickly transmitted into higher transportation costs; increased food prices and escalating production and distribution expenses.
“This cost-push dynamic explains the sharp increase in month-on-month inflation and signals that the underlying inflationary pressures are far from subdued,” Dr. Yusuf explained.
Analysing the CPI data, the CPPE boss noted that it clearly shows that food and transportation-related costs remain the most significant contributors to inflation, accounting for a substantial proportion which is estimated at about 70 per cent of inflationary pressures when direct and indirect effects are considered.
From the data, food inflation stood at 14.31 per cent year-on-year, while core inflation—which captures broader price pressures—rose to 16.21 per cent. On the other hand, transportation costs, which are heavily influenced by fuel prices and logistics inefficiencies, exerted strong upward pressure on prices across sectors as higher transport costs raise the cost of moving food, goods and services nationwide, thereby amplifying inflation.
“These figures are particularly troubling given their direct impact on household welfare. The dominance of food and transport in the inflation basket has profound welfare consequences. These are non-discretionary expenditures, meaning households cannot easily adjust consumption in response to rising prices,” Dr. Yusuf said, adding that the situation is even more concerning given that rural inflation remains elevated, reflecting structural challenges in agricultural productivity and distribution systems.
The implications of these is the erosion of real incomes and purchasing power; rising cost of living pressures on households; increased poverty and vulnerability, particularly in rural areas and heightened inequality across regions and income groups.
The CPPE admonished that given the centrality of food and transportation to inflation and welfare, governments at both federal and subnational levels should prioritise interventions in these sectors.
For instance, in agricultural productivity, there is an urgent need to improve security in farming communities, strengthen rural infrastructure and logistics, enhance access to inputs and financing and promote mechanisation and modern farming techniques.
“Boosting agricultural productivity is the most sustainable pathway to moderating food inflation, not importation. Besides, governments at all levels should invest significantly in mass transit systems, bus and rail, reduce reliance on fragmented private transport systems, introduce regulatory frameworks to curb exploitative pricing and improve urban mobility infrastructure. A more structured and efficient public transport system will significantly reduce inflationary pressures and improve welfare outcomes,” Dr. Yusuf noted.