By JEFF ADE

Centre for the Promotion of Private Enterprise (CPPE) has called for caution in celebrating the drastic deceleration in inflation. The Centre?s Director/Chief Executive Officer, Dr Muda Yusuf said: ?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 firms 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 re-calibrate its strategies to address these major cost drivers.?

He added: ?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 defined 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.?

According to him, the sharp deceleration of the headline inflation rate from 34.8 per cent in December 2024, to 24.48 per cent in January 2025, the drop In food inflation from 39.8 per cent to 26.08 per cent and the decline in core inflation from 29.28 per cent to 22.59 per cent did not come as a surprise given the review of the computation base year from 2009 to 2024. In his view, there is additional 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.

He further said: ?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.?

He also highlights the need 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, he said. This informs his view that the drastic deceleration in inflation should therefore be cautiously celebrated.

?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 defined 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,? he stated.

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