By Chinwendu Obienyi
Nigeria’s persistent inflationary crisis is being driven largely by supply-side pressures rather than demand, according to the Central Bank of Nigeria’s (CBN) latest Inflation Expectation Survey (IES) released yesterday.
The report offers a sharp rebuttal to the prevailing narrative among some economists who attribute the country’s inflation to excess money supply or demand-side pressures.
Instead, the CBN survey finds that structural and cost-related issues—particularly high energy prices, currency depreciation, and rising transportation costs—are the dominant forces behind inflation in the country.
According to the IES, a significant majority of Nigerian firms (90.8 per cent) and households (85.7 per cent) identified energy costs—including expenditures on Premium Motor Spirit (PMS), diesel, and electricity—as the top driver of inflation.
This finding underscores the ongoing impact of energy supply and pricing challenges despite the CBN’s tight monetary stance.
In addition to energy, exchange rate instability ranked as the second-most critical inflation driver, cited by 88.5 per cent of businesses. The continued depreciation of the naira has raised import costs and compounded inflationary risks across various sectors.
Transportation costs were the third most frequently cited contributor, with 87.2 per cent of firms pointing to rising logistics expenses—across road, air, sea, and rail—as a major burden.
Other important inflationary drivers identified by firms include high interest rates (85.5 per cent), insecurity (84.7 per cent), raw material input costs (78.3 per cent), and infrastructure deficits (75.0 per cent).
Households shared a similar perspective, with transportation (85.0 per cent) and exchange rate volatility (82.0 per cent) ranking just behind energy as the most impactful drivers. Insecurity (80.0 per cent) and interest rates (78.7 per cent) also featured prominently among household concerns.
Despite the widespread concern about rising prices, there was a glimmer of optimism among business respondents regarding inflation moderation.
The survey noted that “a higher proportion of the respondents view the current inflation as high,” yet expectations for future inflation appeared more hopeful.
“Looking ahead, 75.1 per cent of businesses and 67.1 per cent of households expect their overall expenditure to increase in the coming month, reflecting the continued strain on purchasing power and cost structures”, the survey said.
Data from the National Bureau of Statistics (NBS) showed that Nigeria’s inflation rate inched lower in April 2025 to 23.71 per cent, down from 24.23 per cent in March. The 0.52 percentage point decline, though modest, provides some relief amid broader economic headwinds.
Reacting to the report, economic experts called for a more comprehensive policy approach that tackles Nigeria’s deep-rooted structural issues—especially in energy, infrastructure, and security—alongside monetary interventions.
“Until these cost drivers are addressed, inflation is expected to remain sticky, with significant implications for businesses and households alike”, they said.