A significant majority of Nigerian households and businesses believe that the current inflation rate is high.
This is according to the Central Bank of Nigeria’s (CBN) Inflation Expectations Report for December 2024.
The report reveals that 83.5% of households and 80.6% of businesses perceive inflation to be at an elevated level, reflecting the persistent economic pressures faced by consumers and enterprises alike.
The findings highlight growing concerns over the rising cost of living and doing business in Nigeria.
The National Bureau of Statistics (NBS) reports that the headline inflation rate in Nigeria reached 34.80% in December 2024.
Inflation Perception Among Businesses
The survey indicates that perceptions of inflation vary across different business sizes:
- 83.6% of large businesses believe inflation is high.
- 75.6% of medium-sized businesses share the same sentiment.
- 83.9% of small businesses also perceive inflation to be at an elevated level.
Among these, small businesses recorded the highest perception of inflation, emphasizing the disproportionate impact of rising prices on SMEs, which form the backbone of Nigeria’s economy.
Household Perception of Inflation
The report also sheds light on how inflation is perceived across various income brackets. Notably, 88.2% of households earning between N150,001 and N200,000 per month believe that inflation is high.
This demonstrates the strain on middle-income earners, who are increasingly finding it difficult to afford essential goods and services due to soaring prices.
Lower-income households are even more vulnerable to inflationary pressures, as food and transportation costs make up a significant portion of their expenses.
Drivers of Inflation Perception
The widespread perception of high inflation aligns with Nigeria’s persistent inflationary trends. The inflation rate has been driven by several key factors, including:
- Rising Food Prices – Staple food items have seen sharp price increases due to supply chain disruptions, insecurity in food-producing regions, and foreign exchange volatility. Food inflation is about 40%. Average food prices have surged by 91.6% between December 2023 to December 2024 according to NBS.
- Energy Costs – The continued increase in petrol and diesel prices, along with electricity tariff hikes, has significantly affected household and business expenses. The price of Liquified Petroleum Gas (cooking gas) rose by 44.62% from December 2023 to December 2024 according to NBS.
- Exchange Rate Volatility – The depreciation of the naira has led to increased costs for imported goods and raw materials, further fueling inflationary pressures.
- Government Policies – Recent fiscal and monetary policies, including subsidy removals and tax reforms, have contributed to the inflationary environment.
