Nigeria’s purchase cost inflation hits five-month low as PMI stays above 52

Nigeria’s private sector sustained its expansion in July as stronger customer demand drove another sharp increase in new orders, although overall business activity slowed from the previous month.

At the same time, purchase cost inflation eased to its lowest level in five months, reflecting softer cost pressures on businesses.

The latest Stanbic IBTC Bank Nigeria Purchasing Managers’ Index compiled by S&P Global showed the headline PMI stood at 52.5 in July, down from 53.4 in June.

While this marked the weakest reading in three months, it remained above the 50.0 threshold that separates expansion from contraction, indicating that private sector business conditions improved for a sixth consecutive month.

What the report says

The report read, “The headline PMI registered 52.5 in July, down from 53.4 in June but still above the 50.0 no-change mark and signalling a sixth successive monthly strengthening in the health of the private sector. The latest improvement in business conditions was solid, albeit the least pronounced in three months.”

According to the report, firms recorded another marked increase in new business during July, extending the current growth streak to six months. Respondents attributed the improvement to stronger customer demand, competitive pricing and the introduction of new products.

• The rise in demand supported a further expansion in business activity, although output growth moderated to its slowest pace since January. Agriculture and manufacturing posted strong output growth, while services and wholesale and retail recorded more modest increases.
• Employment also expanded during the month as firms hired additional workers to meet higher production requirements. However, the pace of job creation eased to a three-month low.
• Businesses simultaneously increased purchasing activity to support current production and prepare for future demand, resulting in another marked rise in inventories.

Despite efforts to expand capacity, some firms reported logistical challenges that delayed project completion, leading to another slight increase in outstanding business. Supplier delivery performance, however, improved after lead times lengthened in the previous survey period.

The report showed inflationary pressures continued to soften during July, with both input costs and output prices rising at slower rates than in June.

Purchase cost inflation recorded the sharpest moderation, easing to its lowest level in five months.

• “Inflationary pressures softened in July, with both input costs and output prices rising at weaker rates than in June. Purchase cost inflation slowed particularly sharply, easing to the lowest in five months,” the report read.

Businesses face higher costs for fuel and raw materials

Nevertheless, businesses continued to face higher costs for fuel and raw materials, which kept overall purchase prices elevated. Staff costs also rose at the weakest pace since April.

• In line with softer input cost inflation, firms increased their selling prices at the slowest pace since February. Agriculture recorded the strongest increase in selling prices, while services experienced the weakest rate of price inflation among the sectors surveyed.
• Business confidence remained positive, although optimism weakened slightly from June’s one-year high. Nearly half of the surveyed firms expect output to increase over the next 12 months, supported by stronger marketing efforts and planned business expansion, including opening new branches.

Commenting on the report, Stanbic IBTC’s Head of Equity Research, West Africa, Muyiwa Oni, said businesses continued to benefit from stronger customer demand during July.

• “Nigerian businesses reported improved customer demand in July while better pricing and new product launches also helped them to capture new orders arising from the increase in demand. These factors helped to keep the private sector activity in an expansionary territory, although this moderated when compared to June,” he said.

Oni noted that firms also stepped up purchases of production inputs to meet current demand and prepare for future workloads.

• He added that while higher fuel and raw material costs continued to push up input prices, “input costs increased at their slowest pace in five months,” while selling price inflation also softened.

The economist said the moderation in cost pressures mirrors the slight easing in Nigeria’s headline inflation, which slowed to 15.91 per cent in June from 15.93 per cent in May.

He projected that annual inflation could ease further to around 15.72 per cent in July, largely due to favourable base effects, although month-on-month inflation is expected to be higher than in June.

• Oni retained Stanbic IBTC’s 2026 GDP growth forecast at 4.1 per cent, with the oil sector expected to grow by 3.45 per cent and the non-oil economy by 4.11 per cent.

He, however, warned that insecurity, renewed exchange rate pressures, adverse weather conditions, rising fertiliser prices and global economic uncertainty remain key risks that could weigh on food production, investor sentiment and capital inflows.

What you should know

Nigeria’s headline inflation rate edged lower to 15.91% in June 2026, compared to 15.93% recorded in May, according to the Consumer Price Index (CPI) report by the National Bureau of Statistics (NBS).

The June inflation rate was significantly lower than the 25.29% recorded in June 2025, reflecting a continued moderation in headline price growth on a year-on-year basis.

On a month-on-month basis, headline inflation slowed to 1.66% in June, down from 1.75% in May, indicating a slower pace of price increases compared to the previous month.