In a recent interview, Professor Segun Ajibola, a renowned economist and former president of the Chartered Institute of Bankers, discussed the lag between Nigeria’s declining inflation rate and the price of goods and services. While inflation dropped for two consecutive years, Ajibola explained that this improvement has yet to fully translate into reduced prices for everyday goods. According to the latest data from the National Bureau of Statistics (NBS), Nigeria’s headline inflation dropped to 23.18% and food inflation to 23.51% in February 2025.
Ajibola attributed the marginal decline in inflation to cost-induced pressures in the economy, which are not easily reversed. He pointed out that while energy costs, such as fuel, saw a reduction in February, the effect on prices of consumables like food, transport, and manufactured goods was minimal and slow to materialize. He noted that in economic terms, prices are “sticky downward,” meaning once they rise, they rarely decrease quickly, even in the face of reducing inflation.
The economist also highlighted that the solutions implemented so far, mainly monetary policies like increased interest rates, have been insufficient in addressing the root causes of inflation. He emphasized that while monetary measures have been used to control inflation, they often fail due to the disconnect between market realities and policy tools. He stressed the need for fiscal policies to better tackle cost-push inflation, which he believes remains a major challenge in Nigeria’s economy.
Ajibola concluded by urging government authorities at all levels to continue combating fiscal inflation, suggesting that a further pause in the monetary policy rate of 27.50% could be critical for sustaining the downward trend in inflation. He remains cautious, however, as he believes more work needs to be done on the fiscal side to combat the persistent inflationary pressures.
source: dailypost