Nigerian businesses and households expect inflation-related spending to gradually ease over the next six months, despite energy costs remaining a persistent burden. According to the Central Bank of Nigeria’s (CBN) July 2026 Inflation Expectation Survey, overall optimism is improving even as key operational costs remain elevated.
The survey highlighted that energy costs, insecurity, interest rates, and exchange rate fluctuations continue to shape how Nigerians perceive price movements. Businesses reported a more severe impact from inflation than households, though they also expressed greater optimism about future moderation.
Energy and Insecurity Dominate Inflation Perceptions
Energy expenses, including petrol (PMS), diesel, and electricity, were identified as the primary driver of inflation perceptions. Firms rated energy costs at 74.1 points, while households scored them at 61.9 points.
Insecurity emerged as the second-largest concern for businesses at 71.3 points and the third-largest for households at 56.5 points. For firms, high interest rates at 69.0 points and exchange rate movements at 68.8 points also heavily influenced their negative perceptions.
For households, transportation costs ranked as the second-highest driver at 61.2 points, followed by exchange rate movements at 54.1 points. Conversely, natural disasters, raw material costs, and infrastructural challenges were viewed as less significant contributors during the month.
Middle-Income Earners Feel the Hardest Pinch
The CBN survey revealed notable disparities in how inflation is experienced across different income brackets. Middle-income households earning between N150,001 and N250,000 recorded the highest inflation perception at 71.0%.
In contrast, higher-income respondents earning between N350,001 and N450,000 reported the lowest perception of high inflation at 55.6%. This suggests that middle-income earners are currently bearing the brunt of the ongoing cost-of-living squeeze.
Despite these pressures, the Inflation Perception Index fell to 40.0 points in July, indicating that respondents felt current inflation had moderated compared to June. Looking ahead, the Inflation Expectation Index is projected to decline further to 21.2 points in August, signaling expectations of continued easing.
Expectations Align with Easing Headline Inflation
The improving expectations of consumers and businesses align with recent official data from the National Bureau of Statistics (NBS). Nigeria's headline inflation rate eased marginally to 15.91% in June 2026, down from 15.93% recorded in May.
This moderation occurred alongside key market developments, including the Dangote Refinery slashing its ex-depot petrol price to N1,075 per litre on July 2nd. However, recent global oil price spikes driven by the resumption of the U.S.-Iran conflict could pose fresh risks to domestic energy pricing.
Additionally, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) is proposing new anti-competitive regulations to prevent fuel price-fixing. The NBS is scheduled to release the August 2026 Consumer Price Index report on Monday, August 17, 2026, which will confirm if these positive expectations match actual market data.
