The Manufacturing Association of Nigeria (MAN) has predicted a rise in inflation and the closure of more businesses, especially small and medium enterprises,following the current increase white products prices across the country.

The Nigerian National Petroleum Company Limited (NNPCL), earrly this week, increased petrol price from ₦568 per litre to ₦855 per litre, across its sales outlets nationwide, prompting increased transport fares and other goods and services in the country.

Segun Ajayi-Kadir, the Director-General of MAN, in a review of the new price hike, noted that the impact of this, judging from what is already on the ground even as witnessed in the past, would increase the cost of transportation, and the prices of goods and services.

He said, “As the cost of petrol rises, consumers will spend more on transportation and energy, leaving them with less disposable income. This decrease in purchasing power may lead to reduced demand for non-essential goods and services, affecting businesses across various sectors. These point to the possibility of a rise in inflation figures, impacting household budgets”.
The MAN helmsman added that the price hike would further ensure the poor performance of the manufacturing sector,while raising concerns it will add to production input and logistics costs.

“These will lead to higher prices and in the face of dwindling disposable income of the average Nigerian”.

“A further decline in consumer demand will see manufacturers’ unplanned inventory rising and reduction in capacity utilisation. Manufacturing performance would be negatively impacted.”

Ajayi, further added that businesses would need to adjust their pricing strategies, which could lead to reduced profit margins as consumers’ demand is expected to weaken.

He foresees that Small and medium-sized enterprises (SMEs), which often operate on thin margins, could be particularly hard-hit and the increased costs could force some to scale down operations or even shut down if they are unable to pass on the additional costs to consumers.

Inflation peaked at 33.4 per cent in July 2024 and in 2023 alone, over 700 manufacturers shut down operations and 335 became distressed over the rising economic crisis in Nigeria.