The Central Bank of Nigeria (CBN) has reported that the overwhelming majority of Nigerian firms identify high energy costs, particularly fuel, diesel, and electricity, as the leading cause of rising inflation in the country.
This was disclosed in its May 2025 Inflation Expectation Survey, which highlights worsening concerns about the cost environment for businesses across the country.
According to the report, 90.8% of respondent firms ranked energy costs as the top factor contributing to inflation.
This includes expenses on Premium Motor Spirit (PMS), diesel, and electricity, reflecting how energy supply and pricing remain a core structural challenge in Nigeria’s inflation battle.
The result affirmed that despite the CBN’s tight monetary policy with the Monetary Policy Rate (MPR) at 27.5%, inflation is still being driven predominantly by supply-side pressures, which interest rate tools alone may not effectively resolve.
While energy ranked highest, other structural and policy-related issues were also flagged.
The CBN report read, “Respondents (Businesses and Households) identified energy, exchange rate, and transportation as the top three inflation drivers. However, natural disasters, activities of middlemen, and infrastructural challenges were perceived as less significant contributors to inflation drivers in the review period.”
Looking ahead, 43.1% of households and 29.7% of businesses expect inflation to rise in June, while 75.1% of businesses and 67.1% of households expect their expenditure to increase this month.
Also, a majority of respondents (68.9%) want the CBNs to reduce interest rates, while only 10.9% support a rate hike and 20.2% prefer it remains unchanged.
Nigeria’s inflation rate eased to 23.71% in April 2025, down from 24.23% recorded in March, according to the National Bureau of Statistics (NBS). The figure marks a modest decline of 0.52 percentage points, offering a glimmer of hope amid persistent economic challenges and rising cost-of-living pressures across the country.
The latest CBN report reinforces the argument that Nigeria’s inflation crisis is not driven solely by demand or money supply, but by persistent structural bottlenecks.
With both firms and households ranking energy, transport, and exchange rate issues as top contributors, it is clear that Nigeria’s inflationary spiral is being fuelled largely by cost-push factors.