In the wake of a marginal drop in Nigeria’s inflation rate, the Lagos Chamber of Commerce and Industry (LCCI) has issued a cautionary note to economic managers: beware the illusion of progress. While headline inflation eased to 22.97% in May 2025, down from 23.71% in April, the Chamber has warned that underlying structural risks remain potent and could quickly reverse any gains if left unaddressed.
Dr. Chinyere Almona, Director-General of the LCCI, hailed the data released by the National Bureau of Statistics (NBS) as a positive, albeit modest, shift in the country’s inflationary trajectory after months of relentless price surges. But in a strongly worded statement, she noted that monetary tightening by the Central Bank of Nigeria (CBN)—through higher interest rates and liquidity control—could only go so far in the absence of deeper structural reforms.
“We must not lose momentum now. This progress is fragile, and the risks are real,” Almona warned. “Food insecurity, weak logistics, and macroeconomic shocks from global conflicts could easily derail this stability.”
Inflation Cooling—But for How Long?
The CBN’s rate hikes appear to be biting, yet the real economy remains exposed to inflationary shocks. Almona pointed to rising food inflation, the single largest component of Nigeria’s inflation index, as the most troubling threat ahead of Q3 and Q4.
From herders-farmers clashes in the North-Central, to worsening floods in agrarian belts, Nigeria’s food supply chains remain highly vulnerable. Insecurity continues to discourage farming in many parts of the country, while logistics inefficiencies from rural areas to urban markets add layers of cost.
Globally, the unresolved conflict in Ukraine, coupled with Middle East tensions, is pushing up oil prices and disrupting import channels. This compounds Nigeria’s problem, as a net fuel importer still exposed to foreign exchange volatility and global supply shocks.
Policy Coordination Needed, Not Just CBN Hikes
Almona urged the federal government to pursue coordinated fiscal and monetary responses, warning that reliance on monetary policy alone was inadequate. She called for:
- Increased investment in agricultural infrastructure, especially for irrigation and dry season farming, to reduce the country’s dependence on rain-fed agriculture.
- Improved security architecture to allow farming and transportation to flourish.
- Decongestion of supply chains to reduce post-harvest losses and food price spikes.
- Sustained fuel market reforms, particularly maintaining the ‘naira-for-crude’ arrangement and mandated crude allocation to domestic refineries, which have helped temper pump price volatility.
In addition, she advised that the stoppage of CBN’s Ways and Means financing—a key driver of previous inflationary pressures—be maintained, despite political pressures for deficit monetisation.
Sustaining the Gains, Avoiding Policy Slippage
Almona’s comments echo a growing consensus among development economists: Nigeria’s inflation is more structural than cyclical, and any meaningful progress will depend on long-term reforms that tackle the root causes—food insecurity, energy dependence, weak infrastructure, and inconsistent policy implementation.
Her call to maintain prudent monetary policy while expanding credit access to agriculture and manufacturing points to a dual imperative—curbing demand-side pressures without starving the productive economy of liquidity.
Bottom Line
While the dip in inflation is welcome, it is not a turning point—yet. Without urgent action on the structural enablers of inflation, Nigeria risks squandering its fragile progress. For investors, businesses, and households, the message is clear: brace for continued volatility unless economic managers shift from reaction to transformation.
As Almona aptly concludes:
“This moment must not be wasted. We have an opportunity to make inflation containment sustainable—but only if we match monetary policy with real structural action.”
