Inflationary Pressures Ease In July As Firms Report Slowest Input Cost Rise

Inflationary pressures in Nigeria’s private sector eased in July 2026, with companies reporting the slowest rise in input costs in five months, according to the Stanbic IBTC Purchasing Managers’ Index (PMI).

The headline PMI stood at 52.5 in July, down from 53.4 in June but still above the 50.0 mark that signals expansion. It marked a sixth consecutive month of improvement in business conditions, albeit at the weakest pace in three months.

The report showed that both input and output prices increased at weaker rates compared to June.

“Purchase cost inflation slowed sharply, hitting a five-month low. Firms still cited higher costs for fuel and raw materials as key drivers, but the overall pace of increase moderated. Staff costs also rose modestly, and at the softest rate since April.

“In line with lower input costs, Nigerian companies raised their own selling prices at the weakest pace since February. The agriculture sector recorded the fastest increase in charges for the month, while services posted the slowest pace of inflation. Supplier performance also improved at the start of Q3, reversing a lengthening of delivery times recorded in the previous survey period,” the report noted.

The report said, “inflationary pressures softened in July, with both input costs and output prices rising at weaker rates than in June. Purchase cost inflation slowed particularly sharply, easing to the lowest in five months. Purchase prices continued to rise at a marked pace, however, due to higher costs for fuel and raw materials.”

It added that “despite the slowdown in the headline index, demand remained resilient. Companies signalled a further marked increase in new business, extending the growth streak to six months. Respondents attributed this to new product launches, competitive pricing, and general improvements in customer demand.

“The stronger order books supported a further rise in output and purchasing activity as firms prepared for current workloads and future expansion. Employment also increased, though the pace eased to a three-month low.”

The head of Equity Research West Africa at Stanbic IBTC Bank, Muyiwa Oni said the moderation reflected softer cost pressures but noted risks remain.

“While input costs increased at their slowest pace in five months, panelists reported higher costs for fuel and raw materials. Selling prices also softened in line with the picture for input costs in July,” Oni said.

On the macro-outlook, he noted that headline inflation eased slightly to 15.91 per cent year-on-year in June from 15.93 per cent in May, snapping three months of increases.

“Although July inflation is likely to be higher m/m, we expect inflation Y-o-Y to print lower, likely at 15.72 per cent Y-o-Y primarily driven by favourable base effects from the corresponding period of last year,” Oni added.

Stanbic IBTC retained its 2026 GDP growth forecast at 4.1 per cent, projecting 3.45 per cent Y-o-Y growth for the oil sector and 4.11 per cent Y-o-Y for the non-oil sector. Key risks flagged include insecurity, exchange rate pressures, extreme weather, higher fertilizer prices, and a volatile global environment that could affect capital flows.