The Central Bank of Nigeria (CBN) has raised concerns about a potential surge in inflation, citing rising input costs across major sectors of the economy. In its June 2025 Purchasing Managers’ Index (PMI) report, the apex bank noted that businesses are currently absorbing increased operational costs, a strategy that may not be sustainable in the long run. The CBN warned that this pressure on profit margins could eventually force businesses to pass on costs to consumers, potentially driving up inflation.
According to the report, input price indices surpassed output price indices in the composite economy and across the Agriculture, Services, and Industry sectors. This imbalance suggests that while firms are maintaining output prices for now, they are doing so at the expense of profitability. The CBN emphasized that the growing gap between input and output prices is a red flag for future consumer price hikes if current trends persist.
The agriculture sector was hit hardest, recording the highest cost absorption index at 9.8 points in June, indicating significant pressure on farmers and agribusinesses. In contrast, the services sector had the lowest cost absorption gap at 4.4 points. Despite these challenges, all three sectors showed continued growth in business activity, reflecting underlying economic momentum.
The composite PMI stood at 52.3 index points in June, signaling the sixth consecutive month of expansion in Nigeria’s economic activity. Of the 36 subsectors surveyed nationwide, 25 reported positive growth. The Industry sector recorded a PMI of 51.4, with nine out of 17 industrial subsectors showing expansion, driven mainly by increased production output.
The Services sector posted a PMI of 51.3 points, bolstered by robust business activity across 11 of its 14 subsectors. Agriculture led the growth with a PMI of 55.2—the highest of all segments—marking its eleventh straight month of expansion. This growth was attributed to improved farming operations, as all five subsectors in agriculture recorded positive performance, showcasing the sector’s resilience despite mounting cost pressures.
Source: Punch