Out of 400 private sector companies in Nigeria, close to 60 percent posted a rise in input costs in June, according to the latest Purchasing Managers’ Index (PMI) report.

The latest monthly PMI by Stanbic IBTC Bank showed that in line with the trend in input costs, companies increased their selling prices sharply again last month.

“The pace of inflation quickened slightly from that seen in May,” the report said.

It added that subdued demand and intense price pressures affected business activity in Africa’s most populous nation as it fell to the lowest in seven months.

The headline index fell to 50.1 in June from 52.1 in the previous month. Readings above 50.0 signal an improvement in business conditions, while those below show deterioration.

“The Stanbic IBTC headline PMI dropped to a seven-month low of 50.1 points in June from 52.1 in May due to moderation in domestic demand amid the intensification of price pressures, leading to slowdowns in growth of output and new orders,” Muyiwa Oni, head of equity research West Africa at Stanbic IBTC Bank, said in the report.

“Notably, new orders recorded a near-stagnation as new business increased marginally and at the slowest pace in the current seven-month sequence of expansion. Besides, financial challenges at customers reportedly limited the ability of firms to fully benefit from any improvement in underlying demand,” he added.

According to Oni, output rose at a slower pace during June, settling at its weakest level in four months.

“Meanwhile, the rate of inflation in overall input prices remained elevated in June, ticking higher for the second month running to the strongest since March.”

The PMI index, which measures the performance of the private sector, is derived from a survey of 400 companies from agriculture, manufacturing, services, construction and retail sectors.

It is a composite index based on five individual indexes with the following weights: new orders (30 percent), output (25 percent), employment (20 percent), suppliers’ delivery times (15 percent), and stock of items purchased (10 percent), with the delivery times index inverted so that it moves in a comparable direction.

“Companies increased their selling prices rapidly again in June, with the pace of inflation quickening slightly from that seen in May. The sharper rise in output prices was in tandem with a faster increase in input costs,” authors of the PMI report said.

They added that purchase price inflation was recorded amid currency weakness and higher raw material costs, particularly those related to animal feed, and that efforts to help workers with increased living and transportation costs led to a further solid rise in wages.

“In line with the picture for new orders, output rose at a slower pace during June. The rate of expansion was slight and the weakest in four months. The agriculture and manufacturing sectors posted faster increases in business activity than services and wholesale & retail.”

Over the past year, the Consumer Price Index also known as the inflation rate in Africa’s biggest economy has accelerated to the highest on record largely on the back of Federal Government reforms such as the removal of petrol subsidy and naira devaluation.

Data from the National Bureau of Statistics shows that the headline inflation rose for the 17th straight time to 33.95 percent in May, up from 33.69 percent in the previous month.

Food prices, which is a major contributing factor to the surge in the inflation rate, grew to 40.66 percent from 40.53 percent.