The Stanbic IBTC Bank’s Purchasing Manager’s Index (PMI) indicated that the strengthening of the Naira in the foreign exchange market helped to slow down the pace of inflationary pressure in April.
According to the PMI report, there was a marginal improvement in business conditions within the Nigerian private sector, with the index rising slightly to 51.1 percentage points in April from 51.0 in March. This marks the fifth consecutive month of positive business conditions.
The report highlighted that the conditions for firms were significantly influenced by the movements of the Naira in the foreign exchange market and the subsequent impact on prices.
The strengthening of the currency over the past month led to a sharp deceleration in the rates of increase in purchase prices and output charges, although inflationary pressures remained considerable.
“The latest rise in selling prices was the softest in just under a year. Slower price increases were seen across all four broad sectors covered by the survey,” the report stated. Despite the less pronounced price increases compared to March, the extent of inflationary pressures continued to limit the growth rates in output and new orders in April, both of which remained unchanged from the previous month.
The report underscored that the improved strength of the Naira played a crucial role in mitigating inflationary pressures, thereby providing some relief to businesses. However, it also noted that inflationary pressures still posed a significant challenge to the growth of output and new orders, indicating that while conditions have improved, there are still hurdles to overcome.
