Input cost inflation in Nigeria slowed to its weakest pace in 10 months in March 2025, as businesses reported softer increases in both purchase prices and staff costs, according to the latest Stanbic IBTC Bank Nigeria Purchasing Managers’ Index (PMI) report.
It also noted that the headline PMI rose to 54.3 from 53.7 in February, marking the highest reading since January 2024. This also marked the fourth consecutive month of improvement in business conditions.
According to the report, the easing inflationary pressures have significantly supported domestic demand conditions, allowing private sector activity to strengthen further.
Despite the moderation in input costs, firms continued to experience notable rises in both purchase prices and staff costs.
However, the pace of these increases was slower compared to previous months.
The reduction in inflationary pressure also allowed companies to ease the rate at which they increased selling prices, marking the third successive month of softer output price inflation.
Alongside cooling inflation, the private sector witnessed a marked increase in output and new orders.
The positive business environment also encouraged firms to expand their workforce, with March marking the fourth consecutive month of job creation.
Businesses attributed this to prompt payments and favorable road conditions. Faster delivery times allowed companies to maintain a steady flow of inputs to support production.
Despite the overall positive performance, the report highlighted a dip in business confidence, which fell to a three-month low.
For the entire year, Stanbic IBTC forecasts a 3.4% growth rate in the non-oil sector, supported by stable foreign exchange conditions and improved liquidity.
“Therefore, we still expect the Nigerian economy to grow by 3.5% y/y in real terms in 2025 with the Q1:25 growth print forecasted to settle at 3.7% y/y,” Oni noted.
The projected reduction in borrowing costs is expected to bolster the real sector further, including manufacturing, trade, and real estate.