Rising inflation sparks economic concerns as economist warns of deep structural issues

Nigeria’s inflation crisis has once again taken center stage, as financial expert Bismarck Rewane, Managing Director of Financial Derivatives Company (FDC), warns that the persistent rise in prices signals deeper structural problems in the economy.

Speaking on Business Morning on Channels TV on Monday, Rewane analyzed the latest inflation figures, expressing concern over the steady increase in core inflation and month-on-month inflation, both of which indicate underlying economic inefficiencies.

“If you look at the latest inflation numbers, core inflation increased, and month-on-month inflation increased dramatically. This means that there are structural issues that need to be taken care of,” Rewane stated.

According to the latest Consumer Price Index (CPI) and Inflation Report released by the National Bureau of Statistics (NBS), Nigeria’s inflation rate fell slightly to 23.18 per cent in February 2025, down from 24.1 per cent in January 2025.

While this marginal decline may seem like a positive development, experts caution that deeper structural challenges remain unresolved.

Rewane emphasized that when structural inflation becomes entrenched in an economy, the transition from moderate to high inflation can happen rapidly.

He pointed to supply chain disruptions, energy shortages, poor infrastructure, and fiscal imbalances as some of the longstanding issues that have worsened inflationary pressures in Nigeria.

“Once structural inflation is entrenched in a country, it doesn’t take long before you can switch from a moderate inflation level to a higher inflation level,” Rewane warned.

The renowned economist suggested that enhancing productivity in key sectors such as agriculture, manufacturing, and critical infrastructure could help stabilize prices over the medium to long term.

READ ALSO: Nigeria’s inflation rate expected to drop to 15% by end of 2025

He urged policymakers to implement structural reforms that would remove bottlenecks hindering economic growth.

“But once your productivity begins to increase significantly because of these bottlenecks… you’ll see the effects,” Rewane stated.

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Beyond Nigeria, the February 2025 Afreximbank Research Monthly Developments in the African Macroeconomic Environment report projects that Africa’s average inflation rate will decline from 8.6 per cent in 2024 to 7.2 per cent in 2025.

The report also highlights how a strong U.S. dollar, fueled by global trade wars and geopolitical tensions, has exerted pressure on African currencies.

Many economies reliant on imports and external debt are facing rising costs of goods and increasing debt burdens, further complicating efforts to control inflation.

However, countries like Angola and Morocco have shown resilience due to strong economic policies, robust foreign exchange reserves, and effective monetary measures.

Despite Nigeria’s ongoing inflationary challenges, Dr. Muda Yusuf, CEO of the Centre for Protection of Private Enterprises (CPPE), remains optimistic about the potential for further declines in inflation throughout 2025.

Yusuf attributes this outlook to a combination of government policies, fiscal discipline, and macroeconomic improvements, which could help stabilize the naira and ease inflationary pressures.

However, with structural deficiencies still weighing on the economy, the road to sustainable price stability remains uncertain.