Input costs hit record high in July — Report

The Stanbic IBTC Purchasing Manager Index has shown that business confidence hit a new low as PMI fell to 51.7 points in July, down from 53.2 points recorded in June.

The report, published by the financial institution on Tuesday, indicated that steep price pressures acted to limit the pace of growth in the Nigerian private sector in July.

The report read in part, “While some firms reported having been able to secure new contracts amid rising customer numbers, others highlighted the negative impact on demand of rising prices.

“July data signalled a steep increase in overall input prices, with the rate of inflation the joint-fastest since the series began in January 2014, equal with that posted in November 2021.”

The report also stated that input costs rose at a pace unsurpassed in more than nine-and-a-half years of data collection.

It noted that purchase costs were a key driver of skyrocketing input prices, adding that higher fuel costs following the subsidy removal and currency weakness were the main factors leading purchase prices to rise.

Meanwhile, staff cost inflation hit a six-month high as firms increased pay to help staff deal with rising transport costs.

It further read, “With input costs up rapidly, companies increased their output prices accordingly, and at one of the strongest rates on record. More than half of companies increased their charges over the month.”

The Head of Equity Research West Africa at Stanbic IBTC Bank, Muyiwa Oni, said, “We had expected inflation to rise faster due to the removal of petrol subsidy and its impact on transport inflation.

“Near term, inflation may still rise further due to the lagged impact of higher transport costs across the various inflation sub-baskets.”