In April 2025, inflation remains a central concern for both businesses and households across Nigeria. Despite some signs of economic stabilisation, the perception of rising prices continues to shape financial behaviour and expectations nationwide. According to the latest Inflation Expectation Survey Report from the Central Bank of Nigeria (CBN), five key factors emerged as the main drivers of inflation perception.

Let’s explore these factors and what they mean for Nigerian consumers, businesses, and the broader economy.

1. Energy Costs Remain the Top Concern

Across the board, Nigerians agree—rising energy costs are putting the most pressure on inflation perception. A staggering 91% of survey respondents identified energy prices (including petrol, diesel, and electricity) as their primary concern.

Fuel prices fluctuated between ₦870 and ₦920 per litre throughout April, while electricity tariffs, particularly for Band A and B consumers, remained high. Band A customers—who receive 20+ hours of daily power—paid ₦209 per kilowatt-hour, while Band B customers paid ₦63/kWh. For many households and small businesses, these rising costs continue to stretch budgets and operational expenses.

2. Exchange Rate Volatility

Although the naira showed relative stability in April—hovering between ₦1,589/$1 and ₦1,605/$1—exchange rate concerns remain a major driver of inflation perception. About 87.8% of respondents highlighted currency value as a key contributor to inflation.

Even with fewer fluctuations than previous months, the impact of exchange rate changes on import prices and the general cost of living remains profound. For a nation heavily dependent on imports, any naira-to-dollar instability quickly translates to rising costs in the market.

3. Transportation Costs on the Rise

Transportation was cited by 86.7% of respondents as a significant factor influencing inflation perception. From road and rail to flight and water travel, rising fuel prices and the removal of subsidies have pushed transport expenses higher across all sectors.

Toll gate charges, port handling fees, storage costs, and cargo insurance have also played a role in inflating logistics costs. This, in turn, feeds into the prices of goods and services, especially in food and retail.

4. Interest Rates and Access to Finance

Another notable factor influencing inflation expectations is Nigeria’s interest rate environment. At the time of reporting, the CBN had maintained its benchmark rate at 27.5%, making borrowing expensive for individuals and businesses alike.

Around 85.3% of respondents acknowledged interest rates as a key inflation driver. With treasury bill yields trending downward to 19%, the flat yield curve has created uncertainty in the lending and investment landscape, impacting economic momentum.

5. Insecurity Adds to Economic Pressure

Security concerns remain a persistent source of anxiety for Nigerians, with 83.9% of respondents linking insecurity to inflationary pressures. April witnessed several tragic incidents, including the killing of over 50 people in Benue and Plateau States, raising concerns about the country’s internal stability and its impact on business activities, food supply, and investment flows.

What Are Nigerians Expecting Next?

Interestingly, the survey revealed a divergence between how businesses and households perceive the future of inflation.

  • Households were more pessimistic:
    • 41% expect inflation to increase in May.
    • 41.5% expect it to stay the same.
    • Only 17.5% anticipate a decrease.
  • Businesses, on the other hand, showed cautious optimism:
    • 55.2% foresee no change.
    • 31.4% expect an increase.
    • 13.4% believe inflation may decline.

Looking further ahead:

  • 36.3% of businesses expect inflation to rise over the next three months.
  • By the six-month mark, expectations were more evenly split—37.3% anticipate a rise, 31.6% predict stability, and 31.1% see a possible decline.

Key Takeaways for 2025

  • Energy, exchange rates, and transportation remain the top inflation concerns.
  • Security issues and high interest rates continue to exacerbate economic pressures.
  • Businesses and households view inflation differently, with households expressing greater concern.

As Nigeria works towards stabilising the economy, managing inflation expectations will be just as critical as controlling the actual inflation rate. Understanding what drives perception allows policymakers, businesses, and everyday Nigerians to respond more effectively—and hopefully, prepare for a more stable economic future.

Source: Nairametrics