Firms Blame Soaring Energy and Transport Costs for Nigeria’s Persistent Inflation – CBN
The Central Bank of Nigeria (CBN) has revealed that a vast majority of Nigerian firms cite high energy costs as the primary driver of inflation. In its May 2025 Inflation Expectation Survey, the CBN reported that 90.8% of surveyed businesses identified the cost of fuel, diesel, and electricity as the most significant inflationary pressure. This finding underscores the structural challenges in Nigeria’s energy sector, which continue to undermine the effectiveness of monetary policies like high interest rates.
Following energy costs, 88.5% of firms pointed to exchange rate volatility as another key inflationary factor, driven largely by Nigeria’s dependence on imported goods and a fluctuating naira. Transportation expenses came in third, with 87.2% of businesses highlighting the high costs of logistics across road, air, water, and rail. Interest rates, while meant to curb inflation, were also identified as a contributor, especially for credit-reliant businesses.
Additional pressures highlighted by firms included insecurity (84.7%), rising costs of raw materials (78.3%), and infrastructural deficiencies (75%). Meanwhile, 73% of businesses blamed middlemen for price distortions, and 63.4% noted the impact of natural disasters. Among households, energy and transportation similarly topped the list, reflecting widespread concern about living costs across income levels and regions.
Perception of inflation remains high among both businesses and households. In May 2025, over 75% of all respondents believed inflation was high—an increase from April. Among households earning N30,001 to N100,000 monthly, 82.9% felt the impact most strongly. Inflation perception also ran high across firm sizes, particularly among large enterprises.
Looking ahead, both businesses and households expect inflation and spending to rise further. A significant majority—68.9%—are calling for interest rate reductions to ease financial pressures. Although the National Bureau of Statistics recorded a slight drop in inflation to 23.71% in April, the CBN’s findings highlight that Nigeria’s inflation is largely cost-push in nature, driven by structural weaknesses rather than demand-side factors alone.
Source: Punch