Fuel, Electricity Blamed by 91% of Firms as Inflation Persists

Samuel Mobolaji

Nearly all Nigerian businesses have blamed soaring energy costs, particularly fuel, diesel, and electricity, for the country’s stubbornly high inflation, according to the Central Bank of Nigeria’s May 2025 Inflation Expectation Survey.

The report revealed that 90.8 per cent of firms cited energy costs as the top inflationary pressure, highlighting the persistent burden of power supply challenges and volatile fuel pricing. Despite the CBN’s tight monetary stance, with the Monetary Policy Rate at 27.5 per cent, cost-push factors continue to undermine inflation control efforts.

Closely following energy costs, 88.5 per cent of firms flagged exchange rate instability as a major contributor, reflecting widespread concern over the impact of naira depreciation on imports and operational expenses. Transport costs were also a major issue, identified by 87.2 per cent of firms, while 85.5 per cent pointed to high interest rates as fuelling inflation rather than easing it.

Other notable contributors to inflation cited by firms include insecurity (84.7 per cent), rising raw material costs (78.3 per cent), and infrastructure gaps (75.0 per cent). Middlemen activities and natural disasters were also mentioned, though ranked lower in severity.

Among households, transportation (85.0 per cent), exchange rate (82.0 per cent), insecurity (80.0 per cent), and interest rates (78.7 per cent) were seen as key inflation drivers—mirroring business concerns.

The CBN survey also revealed growing dissatisfaction with inflation levels. In May, 75.3 per cent of respondents said inflation was high, up from 70.0 per cent in April. Households recorded the sharpest rise in concern, with 79.6 per cent now describing inflation as high, compared to 69.4 per cent the previous month. Among businesses, 71.5 per cent said inflation was high, up from 70.5 per cent.

Large firms were the most impacted, with 78.2 per cent reporting high inflation, followed by micro and medium firms at 72.8 per cent and 70.6 per cent, respectively. Households earning between N30,001 and N100,000 reported the greatest inflationary pressure, with 82.9 per cent describing inflation as high.

Urban and rural inflation perceptions were nearly identical, at 79.8 per cent and 79.3 per cent, respectively. Looking ahead, 43.1 per cent of households and 29.7 per cent of businesses expect inflation to rise in June, while more than two-thirds of both groups expect higher spending this month.

The CBN report also showed that 68.9 per cent of respondents want interest rates reduced, while just 10.9 per cent support further hikes.

Although Nigeria’s inflation rate eased slightly to 23.71 per cent in April from 24.23 per cent in March, the report underscores that inflation is largely being driven by structural weaknesses, not just monetary factors. Both firms and households overwhelmingly point to energy, transport, and exchange rate volatility as the primary inflation triggers, reinforcing the urgent need for long-term reforms.