CPPE Warns Against Further Rate Hike as Inflation Resurges

The Centre for the Promotion of Private Enterprise (CPPE) has raised fresh concerns over renewed inflationary pressures in the economy, following the release of the March 2026 Consumer Price Index (CPI) report by the National Bureau of Statistics (NBS).

Chief Executive of the CPPE, Dr Muda Yusuf in a statement on the latest inflation figure noted that although inflation had shown signs of moderation in recent months, the latest figures signal a troubling reversal, particularly on a month-on-month basis.

This is as he cautioned monetary authorities against further tightening, insisting that the current inflationary trend is largely supply-driven. The MPC had at its last meeting in February cut benchmark interest rate even as analysts project that it will maintain status quo at the next meeting due to the impact of the global oil crisis induced by the war in the Middle East.

Yusuf noted that “further monetary tightening would be ineffective in addressing the root causes of inflation,” it said, warning that high interest rates could stifle investment and constrain the real sector.

He stressed that “the current inflationary pressures are predominantly cost-push in nature, driven by energy, logistics and structural inefficiencies—not excess demand.”

He therefore urged policymakers to adopt a broader strategy that targets structural bottlenecks rather than relying solely on monetary tools.

“The situation calls for urgent and targeted policy responses,” the group said, warning that failure to act decisively could reverse recent gains in inflation moderation and deepen the cost-of-living crisis.

While acknowledging that year-on-year disinflation trends persist, the CPPE boss maintained that the resurgence in monthly inflation signals that macroeconomic stability remains fragile.

Headline inflation had risen slightly to 15.38 per cent in March, while month-on-month inflation surged sharply to 4.18 per cent, almost double the level recorded in February, underscoring what CPPE described as the “fragility of the disinflation process.”

According to the Yusuf, “the latest data signals a worrying resurgence of inflationary pressures, particularly on a month-on-month basis,” adding that the sharp increase “raises concerns about renewed cost pressures in the economy.”

He attributed the spike largely to rising energy costs, which it said continue to ripple through production, transportation and distribution channels. “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,” Yusuf stated.

He further explained that the cost-push effect of energy has translated into higher transportation fares, rising food prices and increased production expenses across sectors.

Further analysis of the CPI data showed that food and transportation costs remain the dominant drivers of inflation, accounting for an estimated 70 per cent of overall price pressures.

Food inflation stood at 14.31 per cent year-on-year, while core inflation climbed to 16.21 per cent, developments the CPPE described as “particularly troubling given their direct impact on household welfare.”

On transportation, the think tank noted that persistent increases in fuel prices and logistics bottlenecks have continued to exert upward pressure on prices nationwide.

“The transmission mechanism is simple: higher transport costs raise the cost of moving food, goods and services nationwide, thereby amplifying inflation,” it stated.

The CPPE boss warned that the trend carries severe welfare implications, especially as food and transport constitute essential spending items for most households.

“The dominance of food and transport in the inflation basket has profound welfare consequences,” he noted, stressing that rising prices are eroding real incomes, worsening poverty levels and deepening inequality, particularly in rural communities.

Yusuf also highlighted structural weaknesses in the transportation sector, pointing to the overwhelming dominance of private operators, noting that transport operators, being largely unionised, wield significant pricing power in an environment with limited regulatory oversight.

“In an environment of rising fuel costs, this structure enables rapid and often disproportionate increases in transport fares, which are quickly transmitted across the economy,” the he warned.

To address the situation, the CPPE Chief urged governments at all levels to prioritise interventions in agriculture and transportation, advocating for significant investment in mass transit systems, alongside regulatory reforms to curb arbitrary fare increases.

“A more structured and efficient public transport system will significantly reduce inflationary pressures and improve welfare outcomes,” it added.

On agriculture, he called for improved security in farming communities, better rural infrastructure, enhanced access to inputs and financing, as well as increased mechanisation. “Boosting agricultural productivity is the most sustainable pathway to moderating food inflation, not importation,” it stated.