The Central Bank of Nigeria (CBN) has raised concerns that increasing input costs across key sectors could soon lead to a fresh wave of consumer price inflation, as businesses struggle to keep absorbing mounting expenses.
This warning came in the CBN’s June 2025 Purchasing Managers’ Index (PMI) report, which showed that input prices for the overall economy as well as for the Industry, Services, and Agriculture sectors were higher than output prices during the month. This growing gap suggests that companies are bearing the brunt of rising costs instead of passing them on to consumers, a trend the CBN says may not be sustainable much longer.
“The widening gap between input and output prices is squeezing business profit margins. Continued cost absorption could soon give way to inflation as firms may be forced to increase prices,” the report stated.
Among the sectors, agriculture had the highest cost absorption index at 9.8 points in June, indicating the largest difference between input and output costs. The services sector saw the smallest gap, at 4.4 points.
Despite these cost pressures, all three major sectors—Industry, Services, and Agriculture—continued to grow in June. The composite PMI stood at 52.3 index points, marking the sixth straight month of economic expansion.
Sector highlights include:
- Industry: PMI of 51.4, with growth in 9 of 17 subsectors, driven by increased production.
- Services: PMI of 51.3, with 11 of 14 subsectors expanding due to higher business activity.
- Agriculture: PMI of 55.2, the strongest performer, driven by robust farming activity. All five subsectors grew, marking the 11th consecutive month of expansion.
Overall, 25 of the 36 subsectors surveyed nationwide reported growth, indicating broad-based momentum in the economy—even as inflationary risks loom on the horizon.
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