BUSINESS activities in the Nigerian private sector failed to improve for the third consecutive month due to inflationary pressure that intensified in September, exacerbating the  challenges faced by companies as the third quarter drew to a close.

Inflationary pressure which rose to a new 28-year high in June shrunk private sector business activities to the negative territory in July, and further stagnated businesses in August.

According to the Stanbic IBTC Bank’s latest Purchasing Managers’ Index (PMI) report released on Wednesday October 2, business activities were compared to 49.8 pinpoints in September and 49.9 in August.

The ICIR reported that business activities started contracting in July when the headline PMI fell to 49.2 for the first time in eight months below the 50.0 no-change mark.

A reading of the PMI below 50.0 points reflects a contraction while above 50.0 points signals expansion in business conditions.

“The headline PMI was little changed in September, posting 49.8 following a reading of 49.9 in August.

“As such, the index pointed to a further fractional deterioration in business conditions, the third in as many months. Companies continued to report challenging demand conditions, in large part due to the inflation environment,” Stanbic IBTC stated.

It indicated that inflation pressured both input costs and output prices to increase at the sharpest rates in six months.

Purchase prices rose rapidly amid currency weakness and higher costs for fuel, logistics, materials and transportation.

Although some firms made efforts to help their workers with higher living costs, the rate of wage inflation eased to an 18-month low.

“Higher costs were then passed through to customers, with close to 49% of respondents raising selling prices in September.

The report indicated further that output rose in agriculture and manufacturing but fell in wholesale and retail and services.

The fall in business confidence in the review month points to a further fractional deterioration in business conditions, largely due to challenging demand conditions amid the inflationary environment, the of Equity Research West Africa at Stanbic IBTC Bank, Muyiwa Oni, said.

“Still, the pace of deterioration remained marginal as some firms were able to secure greater new business during the month.

“Meanwhile, companies remained reluctant to hold inventories in September, cutting stocks of purchases for the second month running and to the largest extent since May 2020,” he added.