A significant proportion of Nigerian households and businesses currently perceive inflation as high, according to the Central Bank of Nigeria’s (CBN) Inflation Expectations Report for December 2024.
The report shows that 83.5% of households and 80.6% of businesses view inflation as elevated, reflecting ongoing economic pressures. These figures highlight the increasing concern over the rising cost of living and doing business in Nigeria.
The National Bureau of Statistics (NBS) reports Nigeria’s headline inflation rate at 34.8% in December 2024, reinforcing the widespread perception of high inflation.
Inflation Perception Among Businesses
The survey reveals varying perceptions of inflation across different business sizes:
- 83.6% of large businesses consider inflation high.
- 75.6% of medium-sized businesses share this view.
- 83.9% of small businesses also report elevated inflation levels, with small businesses feeling the greatest impact. This reflects the disproportionate strain that rising prices place on small and medium-sized enterprises (SMEs), which are critical to Nigeria’s economy.
Household Perception of Inflation
The report also examines inflation perceptions by income bracket. Among households earning between N150,001 and N200,000 monthly, 88.2% report inflation as high. This highlights the challenges faced by middle-income earners, who are increasingly unable to afford essential goods and services. Lower-income households are particularly vulnerable, as food and transportation costs make up a significant part of their expenses.
Drivers of Inflation Perception
The broad perception of high inflation aligns with ongoing inflationary trends in Nigeria. Key drivers of this perception include:
- Rising Food Prices: Prices for staple foods continue to rise, driven by supply chain disruptions, insecurity in food-producing regions, and fluctuations in the foreign exchange market. Food inflation is at approximately 40%, with average food prices increasing by 91.6% from December 2023 to December 2024, according to NBS.
- Energy Costs: The continued rise in petrol and diesel prices, alongside higher electricity tariffs, is increasing household and business expenses. The price of Liquefied Petroleum Gas (LPG) has risen by 44.62% from December 2023 to December 2024.
- Exchange Rate Volatility: The depreciation of the naira is raising costs for imported goods and raw materials, contributing to inflationary pressures.
- Government Policies: Recent fiscal and monetary policies, such as subsidy removals and tax reforms, are further fueling the inflationary environment.