…Says Naira depreciation, higher energy costs driving inflation
The productivity of the Nigerian private sector dropped marginally by -0.1 in April 2025 although business activity maintained its positive momentum into the start of the second quarter of the year as the PMI settled at 54.2 within the month under review compared to 54.3 it recorded in March.
This was revealed in the Purchasing Manager Index (PMI) report of the Stanbic IBTC Bank Plc, whose headline PMI posted above the 50.0 no-change mark for the fifth consecutive month in April. Meanwhile, inflationary pressures ticked up from March but remained muted relative to the picture in 2024.
According to the bank, PMI’s readings above 50.0 signaled an improvement in business conditions on the previous month, while readings below 50.0 showed deterioration.
It said: “At 54.2, the PMI was broadly in line with the 54.3 posted in March and pointed to a solid monthly improvement in business conditions.”
Commenting on the PMI report, the Head of Equity Research West Africa, Stanbic IBTC Bank, Mr. Muyiwa Oni, said: “Nigeria’s private sector business activity maintained its positive momentum into the start of the second quarter of the year as the PMI settled at 54.2 in April – broadly in line with 54.3 recorded in March.
“This latest improvement in business activity was primarily due to improved customer demand amid softening inflationary pressures, helping to support higher new orders.
“Accordingly, all the four monitored sectors posted an improvement in business activity with the most significant improvement seen in the services sector.
“In line with this improvement, the employment level increased for the fifth consecutive month, although the pace of increase was modest this time.”
Oni added that inflationary pressures have continued to soften relative to 2024 as factors that significantly drove prices upward last year have moderated so far this year in term of impacts.
“Nonetheless, inflation increased in April compared to March, exacerbated by the impact of local currency depreciation and higher energy costs.
“Indeed, overall input prices increased across all the four monitored sectors with the manufacturing sector witnessing the strongest inflationary pressures of the month.
“The pass through of the higher input costs to customers meant that output price inflation also quickened in April but remained among the weakest in the past two years.”
According to him, Nigeria’s business conditions started Q2:25 on a positive note, and we expect this trend to be maintained, albeit relatively slower than witnessed in Q1:25.
“This is as the local currency is expected to depreciate in Q2:25 compared to Q1:25 amid the lingering global uncertainties. This could also lead to slightly higher inflation rate than seen in Q1:25 but still expected to remain softer compared to the 2024 average.
“Nonetheless, interest rates are likely to be lower this year amid moderate inflationary pressures, thereby helping to support economic growth over the medium term.
“Overall, we still maintain our expectation that the Nigerian economy is likely to grow by 3.5% y/y in real terms in 2025 relative to 3.4% y/y growth in 2024.”
