By Felix Khanoba
The Independent Media and Policy Initiative (IMPI) says Nigeria’s steady rise in the Purchasing Manager’s Index (PMI) is closely tied to the country’s ongoing decline in inflation, now falling for the seventh month in a row.
In a statement issued by its Chairman, Dr. Omoniyi Akinsiju, the policy think tank noted that Nigeria’s PMI has recorded uninterrupted expansion for eleven straight months since the start of 2025, underscoring the overall health of the economy.
It stated: “By adopting the Predictive Regression (PR) model which uses Ordinary Least Squares (OLS) techniques to model inflation as a function of lagged values of key drivers, such as exchange rates or the Purchasing Manager’s Index (PMI), we were able to establish a consistent pattern of increased productivity and general price reduction with higher intensity beginning from August 2025.
“By our reading, we attest to the inverse relationship between Nigeria’s Purchasing Managers’ Index (PMI) and inflation rate movements. To put this in context, an increase in PMI reflects in a decline in inflation because a PMI hike is suggestive of a higher growth momentum in production and productivity measured across 36 sectors of the economy.”
The organisation highlighted that the PMI has remained above the 50-point growth threshold throughout the year, with the October reading climbing to 55.4, indicating strong and broad-based expansion. It said this upward trajectory has mirrored the steady easing of inflation since April, when the Consumer Price Index (CPI) dropped to 23.71% year-on-year from 24.23% in March.
According to IMPI, the pattern has remained consistent in subsequent months. It recalled that the Central Bank of Nigeria (CBN) posted a composite PMI of 52.40 points in April, slightly above March’s 52.30, signalling continued growth in both manufacturing and services.
It added: “Nigeria’s PMI in May 2025, showed a slow uptick from a composite index of 52.1 index point for the month, indicating a 0.060 index point above the April 52.40 index point.
“The slow upward movement in PMI is evidenced in the equally slow decline in inflation rate to 22.97% in May from 23.71%, a 0.74% difference.”
The group further noted the marginal gains recorded between May and July, with PMI readings rising from 52.1 in May to 52.3 in June and 52.7 in July. These movements were mirrored by equally slight declines in inflation, which eased to 22.22% in June and 21.88% in July.
However, it pointed out that both indicators showed stronger momentum in September, when the PMI climbed to 54.0 while inflation dropped sharply from 20.12% in August to 18.02% in September.
It continued: “The trend in the relationship and movements between the PMI and inflation is further sustained by their respective October figures with the CBN Composite PMI recording 55.4 index points, a significant increase in the PMI recorded between April and September 2025.
“This larger margin of difference also reflected in the country’s headline inflation rate which declined at a much faster rate to 16.05% in October 2025 from 18.02% in September 2025, a decrease of 1.96%.”
IMPI also reaffirmed its projection that inflation will moderate to 14% by December, alongside expectations that the Central Bank’s Monetary Policy Committee (MPC) will further reduce the benchmark interest rate.
It stated: “Going forward, we estimate further expansion in the PMI for the months of November and December 2025 which will also reflect in the inflation rates for the two months. In consideration of this, we reiterate that the inflation rate will decline to 14% by year end as projected in our Policy Statement 030.
“In addition, we also projected in Policy Statement 029 issued before the last meeting of the CBN Monetary Policy Committee (MPC) in September 2025 that we expect it to reduce the Monetary Policy Rate (MPR) by 150 basis points to 26% by year end. The Committee, as a first step, reduced the MPR by 50 basis points to 27% from 27.50%.”
The think tank concluded that the easing inflation environment supports expectations of another rate cut when the MPC meets on November 24 and 25.
“Again, we reiterate that the softer inflation outlook validates the expectations for additional monetary easing by the CBN at its November policy meeting.We therefore expect as a follow-up to our earlier projection, that the MPC will reduce the MPR by 100bps to 26.0% when it meets on the 24th and 25th of this month to determine the country’s benchmark interest rate,” it added.
