Osikhena Dirisu, a programmes director at Beat 99.9 FM, Lagos, was marvelled at the profit declaration by big companies, yet prices remain elevated. “Every major corporation is declaring record profits. But why aren’t we seeing a reduction in the price of food?” He asked.
What Dirisu and many others don’t know is that corporations can only turn a profit because of the increase in the price of goods and services. According to Abdulrauf Bello, a Finance analyst, “companies that are reporting profits didn’t achieve that by price reduction, but by simply increasing the prices of their products.”
Take Nigeria’s telecommunication industry: both MTN and Airtel returned to profitability in 2025 as a result of the NCC’s approval for an over 50 percent hike in tariffs, which increased the price of data and airtime. According to Bosun Tijani, Minister of Communications and Digital Economy, telecom operators had been declaring losses for years because they were unable to raise tariffs. At one point, the sector posted nearly N400 billion in losses, but after the tariff adjustment, companies swung back to profits of almost N500 billion in the first half of 2025.
Tijani explained that while this has restored profitability and secured about half a million jobs in the sector, it came at the cost of higher prices to consumers. The profits are therefore not from efficiency gains or cheaper inputs, but directly from tariff increases passed on to Nigerians.
This same principle applies to consumer goods firms. Nestlé, Nigerian Breweries, and Flour Mills may report higher earnings, but much of this is driven by price adjustments in response to inflation, naira depreciation, and higher energy costs. In other words, profits are coming from charging more, in some cases, increased demand and production, but not from lowering costs.
BUA Foods (H1 2025) recorded N912.5 billion in revenue (a 36% increase year-on-year) and N260.07 billion in profit after tax, a staggering 99 percent jump. According to BUA Foods’ H1 2025 results filed on NGX, the sugar division’s revenue growth was “majorly driven by price adjustments,” while flour benefited from “increased volumes and strategic pricing.” In pasta, the company reported a 16 percent increase in production volume and stronger demand, though in its investor release, it also referenced pricing interventions as a factor supporting margins.
Nestlé Nigeria posted a stunning turnaround in H1 2025, with revenue up 43 percent to N581.1 billion and profit after tax at N50.6 billion compared to a N176.6 billion loss a year earlier. But this was not achieved by reducing the price of Milo or Maggi cubes. Instead, higher product pricing and FX adjustments boosted topline figures while consumers continued to face elevated retail prices.
If profits are being generated by price hikes, rolling back those prices would erase the very margins that just returned, so firms won’t voluntarily cut unless costs fall materially or competition forces it.
Read also: Bumper earnings boost consumer goods firms’ share price in H1
Key costs are still stubborn, especially energy & logistics
Even with inflation easing, companies are not seeing “cheap” operations. Diesel (AGO), the backbone of factories and haulage, averaged N1,813.81/litre in June 2025, up 23.98 percent y/y and 3.16 percent m/m, according to NBS. That keeps distribution expensive from plant to market.
Economy-wide inflation is moderating, but is still high. Headline inflation was 22.22 percent in June and 21.88 percent in July 2025; food inflation averaged 22.36 percent in June–July. Sticky inflation means suppliers, transporters and retailers keep pushing through higher quotes, which show up in shelf prices. When energy and logistics don’t retreat meaningfully, manufacturers have little room to trim price tags.
Policy focuses on the wrong levers?
This disconnect between corporate profits and consumer pain is exacerbated by a policy approach that may be addressing the symptoms rather than the disease of inflation. According to Muda Yusuf of the Centre for the Promotion of Private Enterprise, the current reliance on monetary tightening, while necessary, does little to address the structural supply-side bottlenecks that keep production costs high.
“We are dealing now with not just a monetary issue, we are dealing with the challenge of the supply side issue,” Yusuf stated in a recent interview. “If the productivity challenges remain, then we may not be making a lot of headway.”
He argues for a stronger synergy between fiscal and monetary authorities, specifically calling for reforms to reduce the cost of doing business. Key recommendations include slashing import duties on critical raw materials and production machinery and using tax policy to incentivise the real sector, measures that would directly attack the high input costs that manufacturers like BUA and Nestlé are passing on to consumers.
Without such fiscal interventions to reduce the cost of energy, logistics, and imports, corporations have no buffer to absorb costs and will continue to rely on price hikes to protect their margins. Therefore, even as headline inflation moderates, consumers should not expect significant price drops until these fundamental structural issues are resolved.
