The Central Bank of Nigeria (CBN) has revealed that businesses across the country overwhelmingly attribute Nigeria’s persistent inflation crisis to the soaring costs of energy, including fuel, diesel, and electricity.
In its latest Inflation Expectation Survey for May 2025, the apex bank disclosed that over 90% of firms surveyed identified energy expenses as the leading contributor to the rising cost of goods and services. The findings highlight deep structural issues that go beyond monetary policy and underscore the complex nature of Nigeria’s inflationary environment.
Energy Tops the List of Inflation Triggers
A striking 90.8% of the businesses surveyed pointed to high energy prices—specifically, Premium Motor Spirit (PMS), diesel, and electricity—as the main factor behind the country’s inflationary trend. Despite efforts by the CBN to tame inflation through a tight monetary policy stance, including holding the benchmark interest rate at 27.5%, the survey shows that these supply-side factors continue to weigh heavily on the economy.
Currency, Transport, and Interest Rates Also Weigh Heavily
Following energy costs, 88.5% of respondents cited the exchange rate as a major inflationary driver, reflecting ongoing concerns over currency instability and the cost of imported goods. Close behind, 87.2% blamed transport expenses—spanning road, rail, air, and water logistics—for deepening inflation woes.
The cost of borrowing also remains a pressure point, with 85.5% of businesses identifying interest rates as a significant factor. While aimed at curbing inflation, the current rate may be placing added strain on companies that rely on credit for operations or expansion.
Additional Pressure Points
Insecurity, rising input costs, and inadequate infrastructure were also highlighted. According to the report, 84.7% of firms pointed to insecurity as a key issue, while 78.3% mentioned raw material expenses. Infrastructural deficits were a concern for 75% of respondents.
Meanwhile, factors like middlemen activities (73%) and natural disasters (63.4%) were acknowledged, though they were seen as having less impact.
Households Echo Business Concerns
Nigerian households also echoed similar sentiments. Energy and transport costs were again identified as major inflationary forces, with 85% of respondents emphasizing the burden of rising transportation fees. Exchange rate volatility, insecurity, and interest rates rounded out the top five concerns.
Public Perception of Inflation Remains High
The survey found a growing number of Nigerians perceive inflation to be at elevated levels. In May, 75.3% of all respondents described inflation as high—up from 70% in April. Household concerns rose sharply, with nearly 80% of families expressing worry about rising prices, particularly those earning between ₦30,001 and ₦100,000 monthly.
Businesses also reported heightened inflation awareness, especially among larger firms, where 78.2% flagged inflation as a pressing issue.
Expectations for June: Higher Prices Ahead
Looking forward, 43.1% of households and nearly 30% of businesses expect inflation to rise in June. At the same time, more than two-thirds of respondents—75.1% of businesses and 67.1% of households—anticipate an increase in spending this month.
Reflecting on monetary policy, nearly 69% of those surveyed urged the CBN to cut interest rates, suggesting the current rate may be exacerbating cost pressures for borrowers.
A Modest Decline in Headline Inflation
Despite these challenges, Nigeria’s inflation rate eased slightly in April 2025, falling to 23.71% from 24.23% in March, according to the National Bureau of Statistics. However, the CBN’s latest findings stress that inflation in Nigeria is still largely cost-driven, rooted in energy supply issues, transportation logistics, and currency fluctuations—beyond what monetary policy can easily address.
The survey paints a clear picture: until Nigeria tackles its structural constraints, particularly around energy and infrastructure, inflationary pressure is likely to remain a stubborn feature of the economic landscape.
