Exchange rate, transportation cost, and inflation rate have been listed among the top five drivers of inflation perception by Nigerian businesses and households in the month of April 2025.
The latest Inflation Expectation Survey Report from the Central Bank of Nigeria (CBN) reveals that businesses and households identified exchange rates, transportation costs, energy prices, interest rates, and security concerns as the top five factors influencing inflation perception in April 2025.
Based on the latest CBN Inflation Expectation Survey Report, the following are the top five drivers of inflation in April 2025.
1. Energy (PMS, diesel, electricity)
The report highlights that energy prices, including petrol, diesel, and electricity, had the greatest impact on inflation perception, with 91% of respondents citing it as a major factor.
Throughout April, petrol prices fluctuated between N870 and N920 per liter, further compounding cost pressures.
Additionally, electricity tariffs remained a significant concern, with Band A customers paying N209 per kilowatt-hour (kWh) for a minimum of 20 hours of daily power supply, while Band B customers (16–20 hours of electricity) faced rates of N63 per kWh. These rising costs continue to strain household budgets and business operations.
2. Exchange rate
The exchange rate, which stabilized between N1,589/$1 and N1,605/$1, was the second most influential factor, affecting 87.8% of respondents’ inflation perception.
Despite relative stability in both official and unofficial markets, businesses and consumers remained highly sensitive to exchange rate fluctuations and their impact on import prices and overall inflation.
3. Transportation (road, flight, water, rail)
Transportation costs, covering road, flight, water, and rail travel, ranked third, with 86.7% of respondents citing it as a significant contributor to inflation perception.
The removal of fuel subsidies and fluctuating fuel prices have pushed up transportation costs, while additional charges such as toll fees, port handling expenses, storage fees, and cargo insurance have further elevated expenses.
4. Interest rate
Interest rate was the fourth major factor, influencing 85.3% of respondents.
The CBN maintained interest rates at 27.5% in February, as treasury bill yields trended downward to 19%, creating a flat yield curve that affected borrowing and investment behavior.
5. Insecurity
Lastly, security concerns were identified as the fifth most influential factor, with 83.9% of respondents linking insecurity to rising inflationary pressures.
In April 2025, major security incidents in Benue and Plateau States, including the tragic killing of 56 people in Logo and Gbagir communities, raised concerns about stability and its effect on economic activity.
What you should know
- The survey results show that 48.9% of respondents expect inflation to remain unchanged over the next month, while 35.9% foresee an increase, and 15.3% anticipate a decline.
- Business respondents appeared more conservative, with 55.2% expecting no change in inflation, 31.4% predicting an increase, and 13.4% anticipating a decline.
- Looking ahead to the three-month outlook, 36.3% of businesses expect inflation to rise, 38.7% foresee stability, and 25% predict a decrease.
The six-month projections are more evenly split, with 37.3% forecasting an increase, 31.6% expecting price stability, and 31.1% anticipating lower inflation.
Households, however, expressed greater concern about inflationary trends, with 41% expecting inflation to rise in May, 41.5% predicting no change, and 17.5% foreseeing a decline.
Key Takeaways
Businesses and households have differing expectations, with businesses appearing more conservative in their expectations and households expressing greater concern about rising prices.
– Energy costs, exchange rates, and transportation costs are the top drivers of inflation perception in Nigeria.
– Insecurity is a significant driver of inflation perception, highlighting the need for improved security measures.
– Businesses and households have differing expectations about inflation, with businesses appearing more conservative and households more concerned about rising prices.
