Inflation not market-reflective yet, operators claim
Industry stakeholders have challenged the recent inflation numbers for February from the National Bureau of Statistics (NBS), stating that the reduction in inflation put out is not reflecting in the cost of goods and services.
According to the NBS, Nigeria’s inflation rate dropped for the second consecutive month in February, falling to 23.18 per cent from 24.48 per cent recorded in January. The latest data showed that headline inflation declined by 1.3 percentage points in February, reflecting a drop from 24.48 per cent in January to 23.18 per cent. Compared to the same period in 2024, when inflation stood at 31.7 per cent, the February 2025 figure represented an 8.52 percentage point decrease year-on-year.
Reacting, macroeconomic, business and policy analyst, Vincent Nwani, said the new inflation numbers are simply a mechanical outcome of the rebasing exercise that was done by the government.
“It is like being the judge and the executioner in your own case. Government has seen the high inflation numbers as an embarrassment to their performance and has worked very hard to present a new number that does not capture our reality. However, for businesses and Nigerians, the reality is completely different. While government numbers show an improvement on paper, the reality in the business environment and markets in terms of prices, remains a huge concern.
“The inflation number coming down is a book exercise and does not reflect the situation on ground. The truth of the matter is that the price of goods and services are not coming down. There is no way anyone can convince any analyst that the 50 per cent jump in telecoms services, both data and calls, that we witnessed about a month ago, did not factor into the inflation figures.
“I have personally gone round the markets to ask traders there if the fuel price that has been coming down and stable FX is reflecting in the prices of goods and they all say it has not. Beyond just asking, we all buy items and goods, which of the prices have come down? Instead, they are all going up daily. Our recent research, which was undertaken just two weeks ago, wherein we spoke to about 256 businesses in the distribution space, they all said no prices of goods have reduced. In fact, they made it clear that the prices are set to go up even more. I have no idea where the government is getting its figures from, but our own market intelligence presents a different reality. In fact, our research shows a 36 per cent inflation rate and that is being modest,” he said.
National President, Association of Small Business Owners in Nigeria (ASBON), Femi Egbesola, said what they are seeing is some sort of stability in key indicators rather than a deflation. “A lot of the factors that cause inflation are still on the high side. Take power for instance, we are still hoping for a vast reduction in the price of power because that is one of the major drivers of inflation. Bank interest rates are still high, FX is still high, transportation and logistics are still on the high side. Quite a number of staple food prices are still expensive and we are looking at these prices coming down to actually see a reduction in inflation.”
“However, FX, to some extent, has been stable and that has helped manufacturing because it has helped us get inputs at relatively stable prices. However, FX is still very high but we are hopeful that FX prices crash further as that would be a huge relief to manufacturers as we can only put out what we get. If we produce at high prices, we cannot sell at a loss. Manufacturing equipment, inputs and other indicators have to come down considerably for us to experience a true deflation in prices,” he said.
National Vice-President, National Association of Small-Scale Industrialists, Segun Kuti-George, stressed that instead of a reduction in inflation numbers or deflation, what is obtainable is a relative stability in prices. He said if this stability continues over a period of time, businesses and consumers can begin to see not necessarily a reduction in prices, but more stable prices of goods and services. “The stability is a good development; FX has been relatively stable, fuel prices are relatively stable, food prices are also experiencing some sort of stability and if we can keep this up for some time, it will help our inflation numbers.
“However, it is not yet uhuru because we must remember that current prices have surged beyond people’s income. There has been no remarkable increase in most people’s income and inflation has leapt beyond consumer’s salaries and minimum wage. For non-salary earners, their income has not necessarily improved either and inflation has eroded most people’s earnings.” He noted that if the country can however maintain stability in core inflation indicators, it might begin to truly reflect by the second half of the year.
“I cannot say the NBS inflation figures are correct or not but we will hold on to what they have put out. However, I am a manufacturer myself and I will say the cost of raw materials used for production have not come down but have remained stable for some weeks now. This is why I am stressing stability in prices; let us just keep the indicators stable and we might just begin to see a difference,” he said.
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