The August Stanbic IBTC Purchasing Managers Index survey revealed that the private sector activity decreased halfway through the third quarter of the year as a result of weakening demand brought on by rising costs.
The Punch reported that the input costs and output charges reportedly climbed to the greatest level since the survey’s start roughly ten years ago.
According to the report, currency weakness and higher transport expenses brought about by the loss of the fuel subsidy were the main drivers of inflation.
The headline PMI decreased for a third consecutive month in August, falling to 50.2 from 51.7 in July. This was the lowest reading in the current five-month trend of improving business conditions.
Additionally, input costs rose the most since the survey’s start in January 2014 as close to three-fifths of respondents posted a rise over the month.
In addition, the research revealed that employee costs increased at an even faster rate, reaching a new survey top.
While several survey participants claimed that currency weakness increased inflationary pressures, higher transportation costs were the primary cause of price increases.
As a result, businesses raised their selling prices at a rate that set new records, and inflation rates now outpace their prior high point from December 2021.
According to the Head of Equity Research West Africa at Stanbic IBTC Bank, Muyiwa Oni, “The slower growth in Q2:23 reflects the slowdown in consumer spending and economic activities due to the combined impact of petrol subsidy removal and, to some extent, exchange-rate devaluation.”