Inflation: 49% of Nigerian businesses increased product prices in September – Stanbic PMI

Inflationary pressures continue to hit Nigerian businesses as as many as 49% of businesses in the country saw an increase in prices of products and services in September last year.

This is according to the Stanbic IBTC Purchasing Managers’ Index (PMI) for September, where business conditions in the country remain worse at 49.8, below 50 readings for the third month in a row.

Input costs for businesses rose at the fastest pace in six months as output declined this month, the report said.

The report noted that the monthly decline in the naira coupled with the increase in petrol prices resulted in increased transportation and logistics costs which were passed on to consumers.

It was found that “Purchase prices have skyrocketed amid a weakening currency and higher costs of fuel, logistics, materials and transportation. Some companies have made efforts to help their employees amid higher costs of living, but the rate of wage inflation has fallen to its lowest level in 18 months. The higher costs were then passed on to customers – nearly 49% of respondents increased their sales prices in September.

Decline in business confidence, business confidence

It said that while sharp price increases reduced customer demand, new orders rose for the second month in a row in September, slightly above August’s growth. Business activity continued to decline slightly during the month under review as the improvement in new orders was insufficient to increase production, marking the third consecutive monthly decline in activity.

While production increased in agriculture and industry, it decreased in wholesale and retail trade and services. Employment rose for a fifth straight month, but only slightly, as some companies cut jobs to cut costs.

Business confidence fell in September, reaching its second lowest level on record, just above the low recorded in July. Respondents who were optimistic about the prospects for the next year attributed their optimism to hopes for improved business conditions and business development plans.

Insights

Despite inflation slowing in the last two months of July and August 2024 to 32.15 according to the National Bureau of Statistics (NBS), the analyst expects September inflation to increase due to recent developments in the energy and currency sectors. The projected rise in inflation is due to renewed depreciation of Naira and increase in petrol prices by NNPCL in September.