An overwhelming 85.5% of large businesses in the country perceive inflation levels to be high, which demonstrates the persistent economic challenges faced by enterprises in Nigeria.
This is according to the Central Bank of Nigeria (CBN)’s Inflation Expectations Survey (IES) for January 2025.
The survey further detailed that:
- 78.2% of medium-sized businesses
- 77.6% of small businesses
- 80.9% of micro businesses
also share similar sentiments regarding inflationary pressures.
“A breakdown of the perception indicated that large businesses have the highest inflation perception while small businesses recorded the lowest perception,” the report stated. This suggests that businesses with larger operational scales are more sensitive to macroeconomic trends, particularly inflationary pressures, which could influence pricing strategies, investment decisions, and employment levels.
The report further highlighted that inflation perception is influenced by several key factors, including energy costs, exchange rates, transportation costs, and interest rates. These elements have significantly shaped businesses’ outlook on inflation, reinforcing the widespread concern across different business segments.
The National Bureau of Statistics (NBS) reports that the headline inflation rate in Nigeria reached 34.80% in December 2024.
Urban and Rural Disparities in Inflation Perception
The survey also analyzed the perception of inflation based on settlement type. It revealed that a higher proportion of urban residents perceive inflation to be high compared to their rural counterparts:
- 83.9% of urban settlers perceive inflation as high.
- 82.8% of rural settlers share the same sentiment.
This disparity suggests that urban residents, who often face higher costs of living, are more exposed to inflationary pressures, particularly in essential goods and services such as housing, transportation, and utilities.
Income Levels and Inflation Perception
Further analysis based on income distribution showed that households earning between N150,001 – N200,000 per month are the most affected, with a higher percentage perceiving inflation as high. This group represents a significant portion of Nigeria’s middle class, indicating that inflation continues to erode the purchasing power of many households.
Inflation Expectations Over the Next Six Months
Despite the high perception of inflation, both businesses and households anticipate a gradual decline in the inflation rate over the next six months. The report states that respondents expect their expenditure levels to decrease in the coming months, suggesting a shift towards more cautious spending patterns amid economic uncertainties.
Month-on-Month Changes in Inflation Perception
Interestingly, the perception of inflation among businesses and households has seen slight month-on-month fluctuations. In December 2024:
- 83.5% of households perceived inflation as high.
- 80.6% of businesses had the same perception.
By January 2025, the figures had shifted slightly:
- 83.6% of households now perceive inflation as high.
- 79.6% of businesses hold a similar view.
This indicates a marginal change in sentiment, with businesses showing a slight decrease in inflation concerns compared to households.
Survey Methodology
- The Inflation Expectations Survey (IES) is conducted by the CBN to gauge inflation perception among businesses and households.
- The respondents were drawn from the establishment frame of the National Bureau of Statistics (NBS) and the National Population Commission (NPC) National List of Enumeration Areas (EAs).
- A total of 3,565 respondents participated in the survey, including 1,900 firms and 1,665 households. The insights from this survey help policymakers understand inflation trends and their impact on various economic segments.
