.Says economy still vulnerable
The Lagos Chamber of Commerce and Industry (LCCI) has warned that the moderation in headline inflation in the past few months should not be taken as a sign of structural stability, insisting the economy still remains vulnerable to upside inflation risks from food supply disruptions, climate variability, insecurity in agricultural belts, oil price volatility, and renewed exchange rate pressure.
The Chamber, in a review of the January inflation data, signed by its Director General, Dr Chinyere Almona, on Wednesday, noted that while the latest inflation data released by the NBS indicated a marginal moderation in headline inflation, the outcome, it argued, reflected an easing in short-term price momentum.
This is attributed to a combination of cyclical, base-effect, and policy-induced factors, rather than deep structural adjustment.
“From a decomposition standpoint, the slowdown is largely attributable to food price deceleration, exchange rate appreciation, and relative stability in domestic energy prices.
“The reduction in food inflation reflects improved post-harvest supply conditions and demand normalisation after the festive period. Exchange rate gains moderated imported inflation and FX pass-through into the core basket, while stable PMS pricing reduced second-round transport and logistics effects,” it argued.
The chamber argued that those developments jointly lowered headline pressure in the short run and improved inflation expectations at the margin.
It observed that a non-trivial portion of the year-on-year decline was influenced by base effects, arising from CPI rebasing and a lower comparison benchmark, which, it argued, showed that the headline improvement partly reflects statistical normalisation rather than a durable contraction in underlying cost drivers.
According to the chamber, the development is further reinforced by the persistence of elevated core inflation, which signals those structural pressures from electricity tariffs, transport costs, rents, and imported intermediate inputs remain embedded in the price system.
It described the current inflation outcome, from a business-cycle perspective, as suggesting a transition from an acceleration phase to a disinflation phase, but not yet to price stability.
“Consequently, the present moderation should be interpreted as a temporary easing of inflationary momentum, not yet a convergence toward a low and stable inflation regime,” it added.
The Chamber therefore called on the government to prioritise supply-side measures, agriculture, logistics, energy, and FX market transparency.
It also urged monetary authorities to balance inflation control with growth by avoiding excessive tightening that raises real costs, while urging the private sector to strengthen local sourcing, supply-chain efficiency, and disciplined pricing.