Selling Price Inflation Eases in Nigeria, Business Activity Accelerates in February
Nigeria’s selling price inflation slowed to a seven-month low in February, according to the latest Stanbic IBTC Bank Nigeria Purchasing Managers’ Index (PMI) report. Despite persistent inflationary pressures, the rate of price increases moderated, offering relief to both businesses and consumers. This shift coincided with a significant rise in business activity, which grew at its fastest rate in over a year. The improvement was attributed to stronger demand, lower fuel prices, and a relatively stable exchange rate, which helped ease cost pressures.
The PMI reading increased to 53.7 in February, up from 52.0 in January, marking the third consecutive month of expansion. The report highlighted robust growth across sectors like agriculture, manufacturing, and services, with the wholesale and retail segment showing only modest improvement. The acceleration in business activity was also reflected in higher new orders and purchasing activity, as businesses ramped up input buying to meet rising demand. Suppliers’ delivery times shortened, further contributing to the positive outlook.
While input cost inflation remained high, it eased to its weakest level in ten months. The slower rise in costs was largely driven by lower fuel prices and a more stable exchange rate, despite rising raw material and staff costs. In response, 39% of businesses raised their selling prices, although fewer than 1% reduced them, signaling a cautious approach to pricing amid ongoing cost pressures. The moderation in selling price inflation provided some relief to firms, though employment growth remained sluggish.
Looking ahead, analysts at Stanbic IBTC Bank expect continued growth in 2025, particularly in Nigeria’s non-oil sectors. Despite the positive business climate, employment growth remained weak due to rising staff costs and cautious hiring practices. Overall, the report reflects a broader trend of economic recovery, with stronger GDP growth in the fourth quarter of 2024 and improved prospects for the coming year.
SOURCE: PUNCH