By Anastasia John E.
A Central Bank of Nigeria (CBN) report reveals that a staggering 83.5% of Nigerian households and 80.6% of businesses perceive the current inflation rate as high, underscoring the persistent economic challenges facing the nation. The CBN’s Inflation Expectations Report for December 2024 paints a clear picture of widespread concern over the rising cost of living and the increasing burden on businesses.
These findings come as the National Bureau of Statistics (NBS) reports the headline inflation rate reaching a troubling 34.80% in December 2024. The CBN report delves deeper, examining inflation perception across various demographics and business sizes.
Businesses Feeling the Pinch:
The survey shows a remarkably consistent perception of high inflation across different business sizes:
- Large Businesses: 83.6%
- Medium Businesses: 75.6%
- Small Businesses: 83.9%
Notably, small businesses, the engine of Nigeria’s economy, report the highest perception of inflation, highlighting the disproportionate impact on these enterprises.
Households Under Pressure:
The report also sheds light on the impact on households, particularly middle-income earners. A significant 88.2% of households earning between N150,001 and N200,000 per month perceive inflation as high, demonstrating the strain on this income bracket. Lower-income households, who already allocate a large portion of their income to essential goods and services, are even more vulnerable.
Key Drivers of Inflation:
The widespread perception of high inflation reflects the reality of Nigeria’s persistent inflationary trends, driven by several interconnected factors: - Soaring Food Prices: Staple food items have experienced sharp price increases due to supply chain disruptions, insecurity in food-producing regions, and foreign exchange volatility. Food inflation hovers around 40%, with average food prices surging by 91.6% between December 2023 and December 2024, according to the NBS.
- Escalating Energy Costs: The continuous rise in petrol and diesel prices, coupled with electricity tariff hikes, has significantly impacted both household budgets and business operating costs. Liquified Petroleum Gas (cooking gas) prices have also jumped by 44.62% from December 2023 to December 2024 (NBS).
- Exchange Rate Volatility: The depreciation of the naira has further fueled inflation by increasing the cost of imported goods and raw materials.
- Impact of Government Policies: Recent fiscal and monetary policies, including subsidy removals and tax reforms, have also contributed to the inflationary environment.
