Market News

By Sami Tunji

The Central Bank of Nigeria has warned that rising input costs across key sectors could spark a new wave of consumer price inflation, as businesses continue to absorb cost pressures that may soon become unsustainable.

This was disclosed in the June 2025 Purchasing Managers’ Index report released by the apex bank.

According to the report, the input price indices for the composite economy, as well as for the Industry, Services, and Agriculture sectors, exceeded their respective output price indices during the review period.

The development, the CBN noted, signals mounting pressure on business margins, with firms currently absorbing costs rather than passing them on to consumers.

“The increase in the gap between higher input costs and output price tends to mount 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 stated.

The report showed that the agriculture sector recorded the highest cost absorption index at 9.8 points in June, indicating the widest gap between input and output prices.

 In contrast, the Services sector recorded the lowest gap at 4.4 points.

Despite this, all three major sectors—industry, services, and agriculture—posted growth in business activity during the month. The composite PMI stood at 52.3 index points in June 2025, reflecting an expansion in economic activity for the sixth consecutive month.

Out of the 36 subsectors surveyed across the country, 25 reported growth in the period under review, suggesting broad-based momentum in the economy.

The Industry sector recorded a PMI of 51.4 index points, marking its sixth straight month of growth. The expansion was largely driven by increased production levels, with nine out of the 17 subsectors within the industrial segment recording growth.

The Services sector posted a PMI of 51.3 points, with 11 of the 14 subsectors reporting increased activity during the period.

The CBN attributed the expansion in services to increased business activity across the subsectors. The agriculture sector led the overall growth, with a PMI reading of 55.2 index points, the highest among the three segments.

It also recorded its eleventh consecutive month of expansion, driven primarily by a boost in farming activities. All five subsectors within the agriculture category posted growth in June.