Comments on January 2025 inflation figures by CPPE

By Dr Muda Yusuf

The sharp deceleration of the headline inflation rate from 34.8% in December 2024, to 24.48% in January 2025, the drop in food
inflation from 39.8% to 26.08% and the decline in core inflation from 29.28% to 22.59% did not come as a surprise given the
review of the computation base year from 2009 to 2024. There is additionally a strong base effect on the inflation figures given the
high inflation regime in 2024, which had a considerable effect on the year-on-year inflation outcomes.

Besides, transaction demand in December 2024 was typically much more intense because of the festivities while the spending
momentum in January was predictably much slower because of lower disposable incomes following intense spending in the
previous month. These are some of the explanatory factors for the sharp deceleration in the inflation numbers in January 2025.

However, it is important to clarify that a drastic reduction in inflation figures is not tantamount to a reduction in price level.

Inflation reduction simply means a reduction in the rate of increase in the general price level, not a reduction in price. The drastic deceleration in inflation should therefore be cautiously celebrated. The reality of high prices has not changed and remains a major factor in the cost of doing business, cost of living and poverty equation in the country. Households and other items are still concerned about high energy costs, the strength of the naira, high interest rate, cost of imports, transportation costs and insecurity.

It is hoped that the government will recalibrate its strategies to address these major cost drivers. What businesses and households desire at this time is a reduction in the general price level from the incredibly high levels in 2024 to a substantial moderation in 2025, which is known in technical parlance as disinflation. The good news, however, is that we are beginning to see indications of such reductions in PMS, diesel, some food items and pharmaceutical products.

It is hoped that this trajectory will be sustained in the course of the year.

Muda Yusuf is the Executive Director & CEO, Promotion of Private Enterprise [CPPE]

Wants to ADVERTISE Your goods & services? Or EVENT Coverage?
Or HAVE Breaking story with pictorial evidence? Or wants to assist us by DONATIONS?
kindly contact us via  09159744240

Goal of allcitynews.ng/allcitynews.blog:-
To interface between policy makers & general public, be most influential, informative and reliable issues-based online newspaper.

Disclaimer:
Comments expressed here do not in anyway reflect the opinions of allcitynews.ng or any employee thereof.