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Energy expenses continue to weigh heavily on Nigerian businesses and households, even as expectations of further inflation moderation improve, according to the Central Bank of Nigeria’s (CBN) July 2026 Inflation Expectations Survey.
The survey revealed that costs linked to petrol, diesel and electricity remain the strongest drivers of inflation concerns among respondents, highlighting the continued pressure of energy prices on living costs and business operations despite recent improvements in inflation sentiment.
Energy Costs Dominate Inflation Concerns
According to the CBN report, energy costs ranked as the leading factor influencing inflation perceptions among both businesses and households.
For businesses, energy-related expenses recorded an index score of 74.1 points, while households placed energy costs at 61.9 points, making it the most significant source of price pressure during the review period.
The findings reflect the impact of elevated fuel prices, electricity expenses and other energy-related costs on production, transportation and household spending patterns.
Businesses Feel Greater Inflation Pressure
The survey showed that companies continue to experience stronger inflation-related pressure compared with households.
About 60.9 per cent of firms reported increased expenditure due to inflation in July, compared with 55.9 per cent of households that recorded higher spending.
The higher impact on businesses reflects the additional burden of rising operational costs, including energy, financing expenses and other inputs required for production and service delivery.
Insecurity and Exchange Rate Pressures Remain Key Factors
Beyond energy costs, insecurity and financial conditions also shaped inflation expectations.
Among businesses, insecurity ranked second with an index score of 71.3 points, followed by interest rates at 69.0 points and exchange rate movements at 68.8 points.
For households, transportation emerged as the second-largest concern with 61.2 points, while insecurity and exchange rate movements also remained significant contributors to inflation perceptions.
The findings indicate that Nigerians continue to feel the effects of broader economic pressures beyond headline inflation figures.
Inflation Expectations Begin to Improve
Despite ongoing challenges, the survey showed improving confidence that inflationary pressures may gradually ease over the coming months.
The Inflation Perception Index stood at 40.0 points in July, suggesting respondents viewed current inflation conditions as less severe compared with the previous month.
The CBN also projected that the Inflation Expectation Index could decline to 21.2 points in August, indicating expectations of further moderation in price pressures.
The improvement comes as Nigeria’s headline inflation recorded a marginal decline, with official data showing inflation easing slightly to 15.91 per cent in June 2026 from 15.93 per cent in May 2026.
Middle-Income Earners Report Highest Inflation Pressure
The survey highlighted differences in inflation experiences across income groups.
Households earning between ₦150,001 and ₦250,000 monthly recorded the highest perception of inflation at 71.0 per cent, while respondents earning between ₦350,001 and ₦450,000 reported the lowest perception level at 55.6 per cent.
The data suggests that inflation pressures continue to affect income groups differently depending on household spending patterns and exposure to essential costs.
Businesses Expect Gradual Relief
Although firms remain concerned about current operating costs, the CBN survey showed that businesses are more optimistic than households about future inflation trends.
Companies expect inflation-related expenses to reduce gradually over the next six months, supported by expectations of improved economic conditions and greater price stability.
However, analysts note that sustained relief will depend on developments in energy markets, exchange rate stability and the effectiveness of ongoing economic reforms.
Energy Challenge Remains Central to Economic Recovery
The latest CBN survey reinforces the role of energy costs as a major factor shaping Nigeria’s inflation outlook.
While easing inflation expectations suggest that economic pressures may be gradually moderating, businesses and households continue to face high costs linked to energy consumption.
For Nigeria to achieve stronger economic recovery, stakeholders say improving energy affordability, strengthening infrastructure and reducing production costs will remain critical to supporting businesses and easing pressure on households.
