Most Nigerian firms cite energy costs as the top driver of inflation – CBN

The Central Bank of Nigeria’s (CBN) latest Inflation Expectation Survey reveals that soaring energy costs are the primary cause of rising inflation in Nigeria, according to over 90% of surveyed firms.

The May 2025 survey highlights that expenses on fuel, diesel, and electricity top the list of inflation drivers, highlighting persistent structural challenges in the country’s energy sector. Despite the CBN’s tight monetary policy, with the Monetary Policy Rate (MPR) at 27.5%, inflationary pressures remain largely fueled by supply-side factors beyond the reach of interest rate adjustments.

Following energy costs, firms identified exchange rate volatility (88.5%) and transportation expenses (87.2%) as key contributors to inflation. High interest rates were also cited by 85.5% of respondents as a significant factor, suggesting that monetary tightening may be increasing operational costs for businesses reliant on credit.

Other notable inflation drivers include insecurity (84.7%), rising raw material costs (78.3%), and infrastructural deficits (75.0%). Households similarly ranked transportation and exchange rates just behind energy as major inflation pressures.

The survey also found growing concern about inflation’s impact, with 75.3% of respondents describing current inflation as high, up from 70% in April. Households earning between N30,001 and N100,000 felt inflation most acutely, with nearly 83% reporting high inflation. Both urban and rural dwellers expressed similar concerns.

43.1% of households and 29.7% of businesses expect inflation to rise in June, while a majority anticipate increased living and operational costs. Reflecting this, nearly 69% of respondents called on the CBN to reduce interest rates to ease financial pressures.

The National Bureau of Statistics reported a slight easing of inflation to 23.71% in April 2025 from 24.23% in March, but the CBN’s findings emphasize that Nigeria’s inflation is driven mainly by cost-push factors linked to energy, currency, and transport challenges.