49 per cent of businesses raise prices in September, says PMI

Inflationary pressure continues to hit Nigerian businesses as up to 49 per cent of businesses in the country reported increasing prices of products and services last month even in the face of reduced business activities due to poor consumer purchasing power.

This is contained in last month’s Purchasing Managers’ Index (PMI).

The report said business conditions in the country remain poor at 49.8, which is below the 50 reading for the third consecutive month.

According to the report released by Stanbic IBTC, the cost of inputs for businesses rose at the sharpest rate in six months as output decreased for the month.

The report noted that the weakness in the naira for the month coupled with an increase in petrol prices exacerbated transportation and logistics costs, which were passed on to consumers.

“Purchase prices rose rapidly amid currency weakness and higher costs for fuel, logistics, materials and transportation. Some firms tried to help their workers with higher living costs, but the rate of wage inflation eased to an 18-month low.

“Higher costs were then passed through to customers, with close to 49 per cent of respondents raising selling prices in September,” it stated.

The report added that although sharp price increases limited customer demand, new orders rose for the second consecutive month, slightly exceeding August’s increase.

In the month under review, business activity declined marginally as the improvement in new orders was insufficient to boost output, marking the third consecutive monthly decrease in activity.

While output increased in the agriculture and manufacturing sector, it declined in wholesale and retail and services.

Employment grew for the fifth month in a row, but only marginally, as some firms limited hiring to reduce costs.

Business confidence fell in September, marking the second-lowest level on record, just above the nadir posted in July. The respondents who were optimistic about the year-ahead outlook attributed their optimism to hopes for improved business conditions and plans for business expansion.