CPPE Warns Rising Fuel, Power Costs Could Push Inflation Up Again

The Centre for the Promotion of Private Enterprise (CPPE) has warned that rising fuel and electricity costs could push inflation up again in Nigeria, threatening recent progress in slowing price increases.

The Chief Executive Officer of CPPE, Muda Yusuf, said headline inflation slowed to 14.63 per cent in September from above 15 per cent in August, but warned that rising energy costs could undermine the improvement.

Speaking on CNBC Africa, Yusuf said energy inflation rose sharply to 5.38 per cent from less than one per cent, increasing the risk of higher transportation, production and operating costs across the economy.

He explained that higher fuel and electricity bills could raise the cost of moving goods, running factories and providing services, eventually forcing businesses to increase prices.

Yusuf also expressed concern over food inflation, which stood at 19.59 per cent in September, significantly above the headline rate.

“If you have headline inflation at slightly over 14 per cent and we’re having food inflation at 19.59 per cent, that shows that there’s still a whole lot of work that needs to be done around food inflation,” he said.

He noted that the slowdown in headline inflation had yet to provide substantial relief to many households because food, transportation and energy remained expensive.

To reduce pressure on prices over the next three to six months, Yusuf urged the federal and state governments to focus on lowering transportation and logistics costs and making agricultural inputs more affordable.

He said farmers were facing rising costs for fertilisers, agrochemicals, seedlings and machinery, many of which depend on imports and foreign exchange.

According to him, government support or subsidies for agricultural inputs could reduce production costs and help ease food inflation.

Yusuf also identified insecurity as a major factor affecting food supplies, saying farmers who could not safely access their farms were contributing to reduced agricultural output.

“Once supply drops, prices go up,” he said, stressing the need to improve security so farmers could return safely to their farms and increase food production.

The CPPE chief also addressed the NNPC’s petrol discount arrangement, saying it provided some relief but was different from the former nationwide fuel subsidy system.

He opposed restoring the previous subsidy regime, estimating that it would require at least N20 trillion, equivalent to $12.99 billion, which he said the government could not reasonably afford.

Yusuf said the NNPC discount arrangement covered about 170 million litres of petrol monthly, representing roughly five per cent of total premium motor spirit (PMS) consumption.

He contrasted this with Nigeria’s daily petrol consumption of about 50 million litres, arguing that restoring the former subsidy would place a much heavier burden on public finances.

“So there’s a whole lot of difference between what the NNPC is proposing and what the traditional form of subsidy was,” he said.

“The traditional form, of course, is not sustainable because we don’t have the finances to support that.”

Looking ahead to the end of the year and 2027, Yusuf identified political uncertainty and geopolitical tensions as major risks to Nigeria’s economic outlook.

He said uncertainty over future government policies could make investors more cautious, while rising global energy prices could increase costs for businesses and consumers.

Despite these concerns, he said recent improvements in Nigeria’s macroeconomic stability could help the country manage domestic and external shocks.

However, Yusuf stressed that sustaining the decline in inflation would depend on controlling energy costs, improving food supplies and reducing the cost of agricultural production.

He warned that unless these pressures were addressed, rising fuel and electricity costs could reverse recent progress in slowing inflation and prolong the financial strain on Nigerian households.