Falling inflation driving stronger PMI growth in Nigeria - IMPI

The Independent Media and Policy Initiative (IMPI) has linked Nigeria’s steady rise in the Purchasing Manager’s Index (PMI) to the country’s persistent decline in inflation over the past seven months.

In a statement issued over the weekend in Abuja, IMPI Chairman, Dr. Omoniyi Akinsiju, said the group’s analysis showed a clear inverse relationship between inflation levels and PMI performance, reflecting improved productivity across key sectors of the economy.

Akinsiju noted that the PMI expanded for the eleventh consecutive month in October, reaching 55.4 index points. 

He described this performance as evidence of “strong and broad-based growth” in output, new orders, and employment nationwide.

He explained that the think-tank deployed a Predictive Regression model using Ordinary Least Squares to assess inflation in relation to lagged values of critical economic indicators, such as the exchange rate and PMI.

“By our reading, we attest to the inverse relationship between Nigeria’s Purchasing Manager’s Index and inflation rate movements,” he said. 

“A higher PMI indicates rising production momentum across 36 sectors, which contributes to easing inflationary pressures.”

According to IMPI, inflation has been easing consistently since April 2025, when it fell to 23.71 per cent. 

The decline has coincided with steady improvements in PMI readings, including a jump from 54.0 in September to 55.4 in October, during which inflation also dropped from 18.02 per cent to 16.05 per cent.

The group highlighted that PMI trends between April and September aligned closely with inflation’s downward movement. April’s PMI stood at 52.40, followed by slight increases to 52.1 in May and 52.3 in June, while July’s rise to 52.7 corresponded with inflation easing to 21.88 per cent.

Akinsiju added that the sharper improvements recorded in September and October point to a stronger pace of economic expansion. 

He reaffirmed IMPI’s earlier forecast that inflation could fall to 14 per cent by the end of 2025, noting that further PMI growth in November and December would support this projection.

He also reiterated IMPI’s expectation that the Central Bank of Nigeria’s Monetary Policy Committee (MPC) will cut the Monetary Policy Rate (MPR) to 26 per cent before year-end, following its recent decision to lower the rate to 27 per cent. 

The group anticipates an additional 100-basis-point reduction at the MPC’s meetings scheduled for November 24 and 25.

IMPI said Nigeria’s softer inflation outlook has created room for more monetary easing, boosting the likelihood of further policy adjustments in the coming weeks.