CPPE: Decline in food inflation rate will improve purchasing power but threaten farm incomes

Muda Yusuf, the chief executive officer (CEO) of the Centre for the Promotion of Private Enterprise (CPPE), said Nigeria’s January 2026 inflation figures signal a “real disinflation” trend, easing pressure on households but raising concerns over farmers’ income sustainability.
On Monday, the National Bureau of Statistics (NBS) said Nigeria’s headline inflation rate dropped to 15.1 percent in January, down from the 15.15 percent recorded in December 2025.
Also, the NBS added that food inflation rate for January was 8.89 percent on a year-on-year basis, below the 29.63 percent in December 2025.
In a statement by Yusuf said the decline in headline inflation and food inflation suggests that price easing is extending beyond food into other segments of the consumption basket.
He described the development as an “important macroeconomic shift” with implications for household welfare, monetary policy direction, agricultural sustainability and private-sector investment strategy.
According to the CPPE chief, the easing in inflationary pressure was broad-based.
“These indicators suggest the emergence of real disinflation rather than temporary price volatility,” Yusuf said.
He added that the moderation in food inflation carries substantial welfare benefits because food accounts for the largest share of household expenditure in Nigeria.
Lower food prices, the economist noted, are expected to improve purchasing power, especially for low-income households, reduce food-security pressures and support recovery in consumer demand for non-food goods and services.
If sustained, Yusuf said the trend could stimulate retail trade, manufacturing utilisation and service-sector activity.
However, he warned that sustained declines in food prices could weaken farm incomes and rural economic stability.
The economist also said prolonged weakness in farm-gate prices may reduce farmers’ revenues and investment capacity, weaken rural purchasing power and discourage agricultural production, potentially triggering future supply shortages and renewed inflationary pressure.
“There is a critical need to balance consumer affordability with producer sustainability to safeguard national food security,” he said.
On policy implications, Yusuf said the disinflation trend creates room for cautious and gradual monetary easing, but stressed that decisions must remain data-driven as core and 12-month average inflation remain elevated.
The CEO also urged the government to deploy targeted measures to protect farm incomes while sustaining affordability, including productivity support, minimum guaranteed prices for selected crops, strategic reserves and expanded agro-processing capacity.
He added that easing inflation, particularly in food, signals gradual recovery in real household demand, creating opportunities in consumer goods, retail, logistics and services.
Yusuf also said sustained disinflation could support gradual interest-rate moderation and improved equity valuations, favouring long-term productive investment over short-term inflation hedging.
The CPPE chief described the January outcome as a meaningful transition toward macroeconomic stabilisation, but said “consolidating the gains while protecting agricultural productivity and rural livelihoods would be critical to achieving durable stability and inclusive growth”.