Prof Segun Ajibola, a renowned economist and former president and chairman of the Council of the Chartered Institute of Bankers, has explained why Nigeria’s two consecutive years of declining inflation have not fully reflected in the prices of goods and services.
He said it would take time for the impact of Nigeria’s lowering inflation to manifest.
He made this known to DAILY POST in an interview on Monday while reacting to February’s inflation rate released by the National Bureau of Statistics.
Nigeria’s headline and food inflation dropped further in February 2025 to 23.18 percent and 23.51 percent, respectively.
Reacting, Prof. Ajibola said the inflation figures released by NBS for February 2025 attest to the nature of inflationary pressure confronting Nigeria’s domestic economy, which is cost-induced.
“Over time, the monetary approach to solving the problem failed because of the disconnect between the nominal, market-infused monetary tools and the real market.
“The cost of energy, notably fuel, relatively came down in the month of February. This had spiral effects on the prices of consumables such as food items, manufactured products, transport fares, and others. The overall impact is seen in the marginal reduction in headline and food inflation.
“However, the impact takes time to manifest because, in ordinary economic parlance, prices are sticky downward. Once up, prices become sticky and slow to come down, and if at all, it takes time.
This comes as the economist urged the government at all levels to do more in combating the fiscal side of inflation.
According to him, a further pause in the monetary policy rate, which stands at 27.50 percent, would be necessary to sustain the inflation rate drop.
“Governments at all levels are doing a lot to combat cost-push inflation. But a lot more needs to be done, especially from the fiscal side, to combat the monster.
“The monetary solutions, such as continued increases in the monetary policy rate, offer no prospect for taming the monster,” he said.
