Selling price inflation in the private sector in Nigeria slowed to a seven-month low in February, according to the latest Stanbic IBTC Bank Nigeria Purchasing Managers’ Index, compiled by S&P Global.
The report, which assesses business conditions in the private sector, indicated that while inflationary pressures remained elevated, the rate of price increases moderated, providing some respite for businesses and consumers.
The decline in selling price inflation coincided with an acceleration in business activity, which expanded at its fastest pace in over a year.
New orders and purchasing activity saw significant increases, supported by a relatively stable exchange rate and lower fuel prices, which contributed to easing cost pressures.
The report stated that firms were able to adjust their pricing strategies as inflationary pressures subsided.
“In line with the picture for input costs, the pace of output price inflation remained sharp in February, but eased to a seven-month low. While employment rose only marginally, companies ramped up their input buying during the month, with the pace of growth the steepest since May 2023.
“Stocks of purchases also increased at a faster pace. Despite rising demand for inputs, suppliers’ delivery times shortened to the greatest extent in seven months as prompt payments led to the speedy delivery of goods,” the report said.
The headline PMI, a key measure of private sector performance, rose to 53.7 in February from 52.0 in January, indicating the strongest improvement in business conditions since January 2024.
A PMI reading above 50.0 signifies expansion, while a reading below 50.0 indicates contraction.
According to the report, business activity increased for the third consecutive month, with growth at its fastest pace in over a year. Respondents attributed the improved performance to strengthening demand, as new orders rose at the sharpest pace in more than 12 months.
Growth was recorded across agriculture, manufacturing, services, and wholesale and retail sectors. However, activity in the wholesale and retail segment increased only fractionally, reflecting a slower pace of recovery compared to other sectors.
Although the rate of input cost inflation remained high, it slowed to its weakest level in ten months. The report noted that the rise in costs was largely driven by higher raw material prices and increasing staff costs, which rose at the sharpest rate since March 2024.
Nonetheless, the moderation in cost pressures led to the slowest increase in selling prices in seven months.
About 39 per cent of firms increased their selling prices in February, while fewer than 1 per cent lowered them, suggesting that businesses remained cautious in their pricing strategies despite persistent cost pressures.
Commenting on the findings, Head of Equity Research, West Africa at Stanbic IBTC Bank, Muyiwa Oni, attributed the easing inflationary pressures to a relatively stable exchange rate and a moderation in fuel prices.
“Activity in Nigeria’s private sector improved for the third consecutive month with the latest PMI reading of 53.7 points in February at its highest level since January 2024 (54.5 points).
“A relatively stable exchange rate and moderation in fuel prices are supporting the ease in inflationary pressures, which in turn helped strengthen consumer demand in the month.
“Thus, new orders increased for the fourth consecutive month, with survey participants noting a greater desire on the part of customers to commit to new projects,” he said.
Despite the improved business climate, job creation remained weak due to cost pressures, with employment rising only marginally in February.
The report noted that employment growth slowed to its weakest pace in three months as businesses remained reluctant to expand their workforce amid rising staff costs.
The PMI report also reflected Nigeria’s broader economic trends, with data showing stronger GDP growth in the fourth quarter of 2024.
Analysts at Stanbic IBTC projected continued growth in 2025, particularly in the non-oil sector, which is expected to benefit from exchange rate stability, improved liquidity, lower borrowing costs, and increased investment in real sector activities such as manufacturing, trade, and real estate.
