The vast majority of Nigerian firms and families think that the inflation rate is high right now.
The Central Bank of Nigeria’s (CBN) December 2024 Inflation Expectations Report states as much.
According to the report, 83.5% of households and 80.6% of businesses believe that inflation is high, which indicates the ongoing economic challenges that consumers and businesses must contend with.
The results show that worries about Nigeria’s rising cost of living and conducting business are becoming increasingly prevalent.
According to the National Bureau of Statistics (NBS), Nigeria’s headline inflation rate was 34.80% in December 2024.
Businesses’ Perceptions of Inflation
According to the survey, opinions on inflation fluctuate depending on the size of the company:
83.6% of big companies think that inflation is high.
75.6% of medium-sized firms share this sentiment.
83.9% of small firms believe that inflation is high.
Small firms, which are the foundation of Nigeria’s economy, reported the highest sense of inflation, highlighting the disproportionate effect of growing costs on them.
Perception of Inflation in Households
Additionally, the paper clarifies how different income levels view inflation. Notably, 88.2% of households with monthly incomes between N150,001 and N200,000 think that inflation is high.
This highlights the burden on middle-class workers, who find it increasingly difficult to pay for necessities due to skyrocketing costs.
Since many of their expenses are related to food and transportation, lower-income households are much more susceptible to inflationary pressures.
Factors Influencing Perception of Inflation
Nigeria’s ongoing inflationary tendencies are consistent with the general notion of high inflation. Several important factors have influenced the rate of inflation, including:
- Growing Costs of Food: Foreign exchange volatility, supply chain disruptions, and insecurity in food-producing regions have all contributed to dramatic price hikes for staple foods. Food inflation is roughly 40%. According to NBS, the average food price increased by 91.6% between December 2023 and December 2024.
- Energy Expenses: Household and company spending have been greatly impacted by the ongoing rise in the price of petrol and diesel and increases in energy tariffs. According to NBS, the price of cooking gas, also known as liquefied petroleum gas, increased by 44.62% between December 2023 and December 2024.
- Exchange Rate Unpredictability: The depreciation of the naira has exacerbated inflationary pressures, raising the price of imported commodities and raw materials.
- Government Policies: Recent fiscal and monetary policies, such as tax cuts and eliminating subsidies, have exacerbated the inflationary climate.
