Nigeria’s inflation crisis is being primarily driven by supply-side cost pressures rather than excess demand, according to the Central Bank of Nigeria’s (CBN) latest Inflation Expectation Survey (IES) released on June 4, 2025. The report challenges the common view that inflation stems mainly from too much money in circulation, instead pointing to structural issues such as high energy prices, currency depreciation, and rising transportation costs as the key culprits.
The survey reveals that the vast majority of Nigerian firms (90.8%) and households (85.7%) identify energy costs—covering fuel and electricity—as the leading factor behind inflation. This highlights ongoing difficulties in the energy sector despite the CBN’s tight monetary policy efforts. Exchange rate volatility came second, with 88.5% of businesses citing the naira’s depreciation as raising import costs and increasing inflation risks.
Transportation costs were the third major driver, with 87.2% of firms blaming rising logistics expenses across various modes of transport. Other significant contributors mentioned by businesses include high interest rates, insecurity, raw material costs, and infrastructure challenges. Households echoed these concerns, also emphasizing insecurity and interest rate pressures.
Despite widespread worries about high prices, the survey shows some cautious optimism. Although a large share of respondents agree inflation remains high, more than two-thirds expect their expenses to rise further in the near term. Meanwhile, official data from the National Bureau of Statistics indicated a slight dip in Nigeria’s inflation rate to 23.71% in April, down from 24.23% in March, offering a modest glimmer of hope.
Economic experts reacting to the survey urge a broader policy response that goes beyond monetary tools to address Nigeria’s deep-rooted structural challenges—especially in energy supply, infrastructure development, and security. They warn that without tackling these fundamental cost drivers, inflation is likely to remain persistent, impacting both businesses and households across the country.
Source: The Sun