The Central Bank of Nigeria has cautioned that if the costs of materials keep increasing for important industries, prices for consumers may rise again.
This is because companies are finding it hard to keep prices as they are without charging customers more.
This caution comes from the June 2025 Purchasing Managers’ Index report released by the apex bank, which highlighted that input price indices across the composite economy including Industry, Services, and Agriculture outpaced their respective output price indices.
“The increase in the gap between higher input costs and output price tends to put pressure on business profit margins.
“Cost absorption by firms is likely to be unsustainable in the long term and may foreshadow future consumer price inflation,” the report noted.
Among all sectors, Agriculture recorded the widest input-output price gap at 9.8 index points in June, suggesting the highest level of cost absorption.
The Services sector experienced the smallest gap at 4.4 points, indicating relatively less margin pressure.
Despite inflation concerns, the study indicated continued economic growth in all sectors.
The composite PMI reached at 52.3 index points in June 2025, reflecting the sixth consecutive month of overall improvement.
Out of 36 subsectors surveyed nationwide, 25 reported expansion in business activity, underscoring broad-based economic momentum.
Increased production was the primary driver of the industry sector’s PMI of 51.4.
There was growth in nine of its seventeen subsectors.
With a PMI of 51.3, the services industry came in second, with 11 of the 14 subsectors growing.
Leading the charge was the Agriculture sector, which recorded a PMI of 55.2 the highest among the three.
This marks the sector’s eleventh straight month of growth, driven by higher farming activity across all five surveyed subsectors.
While the PMI figures reflect sustained recovery and growth, the CBN cautioned that the ongoing mismatch between rising input costs and output prices, if left unchecked, could lead to price hikes by firms, thereby worsening inflationary trends in the near term.
SOURCE: thepointng.com
