The Central Bank of Nigeria (CBN) has revealed that 90.8% of Nigerian businesses attribute the country’s persistently high inflation to rising energy costs, including fuel, diesel, and electricity.
Key Takeaways from the CBN’s May 2025 Inflation Expectation Survey:
Top Cause of Inflation:
The cost of energy—especially Premium Motor Spirit (PMS), diesel, and electricity tariffs—is viewed as the primary inflationary driver by a vast majority of firms.
Structural Challenge:
Despite the CBN’s tight monetary policy (with the Monetary Policy Rate at 27.5%), inflation remains largely supply-side driven, indicating that interest rate hikes alone are insufficient to curb price pressures.
Persistent Cost Pressures:
Businesses continue to face significant cost burdens due to:
Unstable power supply and heavy reliance on generators
Rising global oil prices
Continued removal of fuel subsidies
Inadequate infrastructure and transmission capacity
This underscores the limitations of monetary tightening in addressing cost-push inflation, as it cannot directly fix supply bottlenecks or reduce energy costs.
Call for structural reforms:
The findings renew calls for deeper energy sector reforms, investments in alternative energy, and better fiscal coordination to tackle inflation from the root.
Nigeria’s inflation recently surged above 33%, the highest in decades.
Food and energy prices remain the largest contributors to consumer price spikes.
The survey reflects growing frustration among manufacturers, SMEs, and service firms who face mounting production and operational expenses.
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