Many Nigerian businesses are finding it hard to deal with rising costs. In September, almost half of the businesses in Nigeria said that the prices they charge for their goods and services went up.
This information comes from the Stanbic IBTC Purchasing Managers’ Index (PMI) for September. The report showed a tough climate for businesses as the PMI score was 49.8, which is below the 50 mark for three months in a row. A score under 50 means things are not going well for businesses.
The report also explained that the cost for businesses to buy needed materials and services increased the most it had in six months, which led to less production in that month.
The value of Nigeria’s currency, the naira, grew weaker, and petrol prices went up. This made it more expensive for businesses to transport and deliver their products. These extra costs were then passed on to consumers, meaning they had to pay more.
It was stated, “The price of buying goods and services shot up because of the weak currency and pricier fuel, transport, and materials. Some companies tried to support their employees with rising living costs, but salary increases slowed down to the lowest level seen in 18 months. These higher expenses were then shifted to shoppers, with around 49% of companies raising their product prices last September.”
Decrease in Business Confidence
In September, although higher prices made it tough for customers to buy, new orders still grew compared to the month before. This marked the second month in a row of increased new orders, but this growth was not enough to boost overall production, continuing a trend of declining activity for the third month straight.
While production went up in sectors like agriculture and manufacturing, it went down in retail and services. More people got jobs for the fifth month in a row, but not by much, as many companies tried not to spend too much on hiring.
Business confidence went down again in September, nearly reaching its lowest point ever, just a bit better than in July. Those businesses that remained hopeful about the future believed that things could get better and planned to grow their companies.
Key Points
Even though inflation had slowed in July and August, according to the National Bureau of Statistics (NBS), experts expect that inflation would rise again in September. This is because the naira weakened further and there was a rise in petrol prices by the NNPCL during that month.