The Central Bank of Nigeria (CBN) has raised concerns that escalating input costs across major sectors could soon translate into higher consumer prices, as businesses continue to absorb increasing expenses that may no longer be sustainable.
This warning was contained in the apex bank’s June 2025 Purchasing Managers’ Index (PMI) report, which revealed that the cost of raw materials and services in the economy outpaced selling prices across the Industry, Services, and Agriculture sectors during the month.
The CBN noted that the widening gap between input and output prices is squeezing business margins, with many firms currently choosing to absorb rising costs rather than pass them on to consumers. However, it cautioned that this strategy might not be viable for long.
“The increase in the gap between higher input costs and output price tends to mount pressure on business profit margins. Cost absorption by firms is likely to be unsustainable in the long term and may foreshadow future consumer price inflation,” the report stated.
According to the data, the Agriculture sector recorded the highest cost pressure, with a cost absorption index of 9.8 points, reflecting the largest difference between input and output prices. On the other end, the Services sector had the smallest gap at 4.4 points, indicating relatively less strain on margins.
Despite these pressures, all three major sectors Industry, Services, and Agriculture showed positive momentum in June, continuing a six-month streak of expansion.
The composite PMI for June stood at 52.3 points, signaling continued growth in economic activity. Of the 36 subsectors surveyed nationwide, 25 reported increased business activity, underscoring a broad-based economic recovery.
In the Industry sector, the PMI came in at 51.4 points, also marking its sixth month of growth. This was largely attributed to higher production levels, with nine out of 17 subsectors posting improved performance.
The Services sector followed closely with a PMI of 51.3 points, supported by rising activity in 11 of its 14 subsectors.
Meanwhile, the Agriculture sector led the way with a robust PMI of 55.2, maintaining its position as the fastest-growing segment. It also posted its 11th consecutive month of expansion, driven largely by intensified farming activities. All five subsectors within agriculture recorded growth in June.
