Businesses expect higher spending amid inflation fear, CBN survey reveals

Ngerian businesses are gearing up, not to be taken by surprises as survey shows 50.6 percent expect inflation to rise in January after prices dealt a blow on many company’s bottom line last year.

The Central Bank of Nigeria (CBN) in its monthly ‘Inflation Expectation Survey Report’ showed that while businesses are bearish, 44.2 percent households think prices will remain stable.

“In line with the inflation perception in the current month, more businesses expect higher expenditure compared to households in the current month,” the survey which interviewed a total of 3,565 respondents comprising 1900 firms and 1665 households stated.

Meanwhile, households and businesses anticipate lower spending as their expenditure expectation gradually decreases over the next six months.

The survey further revealed that respondents – both businesses and households — believe that energy cost, exchange rate, transportation cost and interest rate influenced their perception of the inflation rate in January.

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Nigeria is grappling with a persistently rising inflation which climbed to 34.8 percent in December 2024 primarily driven by high food prices and surging transportation cost, according to the National Bureau of Statistics (NBS).

Rising inflation means a tough time for businesses and households as purchasing power will be reduced, leading to ballooning inventory losses while savings would become depleted.

“Most Respondents view the inflation rate as high with household respondents predominantly driving the sentiment in the month under review,” the CBN survey showed.

On inflation perception by business size, the report revealed that large firms consider that the level of prices in January appears to be very high.

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“A breakdown of the perception indicated that large businesses have the highest inflation perception while small businesses recorded the lowest perception”.

CBN noted that analysis by settlement type reveals that a higher proportion of urban residents view the current inflation rate as high.

“Further analysis by income distribution indicates that more households earning between 150,001-200,000 per month perceive inflation to be high,” the report showed.