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The Purchasing Manager Index (PMI) of Stanbic IBTC Bank Plc for the month of April 2025 has shown that the manufacturing sector witnessed the strongest inflationary pressures during the month under review.
According to the report, “The pace of overall input cost inflation was sharp in April and ticked up from that seen in March, but remained weaker than seen on average during 2024. Steep increases in overall input prices were seen across all four monitored sectors, with the strongest inflation in manufacturing.”
It added: “Higher raw material costs, exacerbated by currency weakness, meant that purchase prices increased markedly again at the start of the second quarter of the year. Around 36 per cent of respondents posted a rise in purchase prices during the month, as the pace of inflation ticked up from March.”
The report also said that April data pointed to a further solid rise in staff costs, “with the pace of inflation little-changed from the previous survey period. Higher living costs, efforts to motivate staff and wage increases in order to keep hold of workers all contributed to the latest rise in labour expenses, according to respondents.”
Output prices
The report noted that although the pace of output price inflation quickened slightly in April, it remained among the weakest in the past two years.
“Anecdotal evidence suggested that the rise in charges reflected the pass through of higher input costs to customers. Wholesale & retail registered the fastest rise in selling prices of the four monitored sectors,” it said.
The PMI report attributed the increase in inflationary pressure in April to local currency depreciation and higher energy costs.
It also showed that the productivity of the Nigerian private sector dropped marginally by -0.1 in April 2025 although business activity maintained its positive momentum into the start of the second quarter of the year as the PMI settled at 54.2 in April compared to 54.3 it recorded in March.
According to the report, high costs for materials in some cases meant that firms were not always able to secure the necessary inputs for projects, while other respondents mentioned that power outages had caused delays.
“The pass-through of higher input costs to customers meant that output prices also increased, with inflation here too slightly stronger than in March. Companies remained optimistic that output will rise over the coming year, but sentiment dipped for the third consecutive month. Confidence often reflected business expansion and investment plans,” it added.
Commenting on the PMI report, the Head of Equity Research West Africa, Stanbic IBTC Bank, Mr. Muyiwa Oni, said: “Nigeria’s private sector business activity maintained its positive momentum into the start of the second quarter of the year as the PMI settled at 54.2 in April – broadly in line with 54.3 recorded in March.
“This latest improvement in business activity was primarily due to improved customer demand amid softening inflationary pressures, helping to support higher new orders. Accordingly, all the four monitored sectors posted an improvement in business activity with the most significant improvement seen in the services sector. In line with this improvement, the employment level increased for the fifth consecutive month, although the pace of increase was modest this time.”
Oni said that inflationary pressures have continued to soften relative to 2024 as factors that significantly drove prices upward last year have moderated so far this year in term of impacts.
“Nonetheless, inflation increased in April compared to March, exacerbated by the impact of local currency depreciation and higher energy costs. Indeed, overall input prices increased across all the four monitored sectors with the manufacturing sector witnessing the strongest inflationary pressures of the month. The pass through of the higher input costs to customers meant that output price inflation also quickened in April but remained among the weakest in the past two years,” Oni said.
He added: “Nigeria’s business conditions started Q2:25 on a positive note, and we expect this trend to be maintained, albeit relatively slower than witnessed in Q1:25. This is as the local currency is expected to depreciate in Q2:25 compared to Q1:25 amid the lingering global uncertainties. This could also lead to slightly higher inflation rate than seen in Q1:25 but still expected to remain softer compared to the 2024 average.
“Nonetheless, interest rates are likely to be lower this year amid moderate inflationary pressures, thereby helping to support economic growth over the medium term. Overall, we still maintain our expectation that the Nigerian economy is likely to grow by 3.5 per cent y/y in real terms in 2025 relative to 3.4 per cent y/y growth in 2024.”