Markets

Nigeria’s January Inflation Seen to Remain Flat

Published

8 years ago

February 14, 2017

Nigeria’s January Inflation Seen to Remain Flat

The Financial Derivatives Company Limited (FDC) has estimated a relatively flat movement in the January headline inflation rate to 18.6 per cent, from 18.55 per cent recorded in December.

The National Bureau of Statistics is expected to release January inflation figures tomorrow, according to its data release calendar.

Prices have generally either declined or remained flat recently.

The food basket especially has been relatively more inelastic than other commodities, according to the FDC.

The research and investment firm noted seasonality effects, supply shocks and exchange rate pass through effects through export smuggling are factors to influence the direction of inflation.

“Christmas festive spending contributed to a surge in demand at the end of 2016, albeit marginal in magnitude when compared to previous years. As January approached the seasonal slur in economic activities and lower purchasing power (due to payment of tuition and post Christmas blues) kicked in. Hence, a paltry increase of 0.05 per cent in the year-on-year rate in January,” it stated.

Power supply, distribution and logistics costs were a major challenge for manufacturers in January. Diesel prices skyrocketed to an average of N270/ltr from N140/ltr in the same period the previous year. Power supply from the grid dropped sharply to 2500 MW in January leading to higher distribution and logistics costs. The Producer Purchasing index (PPI), the major ingredient of core inflation is likely to remain high

According to the FDC, exchange rate pass through was considered to have a one-way directional effect on prices. This meant that a weaker naira makes imports expensive. The new phenomenon was that a weak naira makes domestic goods cheaper and increases the incentives for export smuggling.

“The impact of rising prices is felt in the value naira-based earnings and investments. Individuals are unable to afford the same quantity or brands of items to which they purchased at the same income level.

“The fact that there is no corresponding real wage inflation to counteract the effects of rising price inflation has birthed strong consumer resistance in the market. This trend began to manifest itself last year as the pace of inflation began to slowly ease. “However, albeit this revision of expectations, consumers are still unhappy about their present economic realities and have taken to the streets in protests against government policy and economic hardship,” it added.

Up Next

20% of Naira in Circulation is Fake, Says Former CBN Dep Governor

Don't Miss

U.K. House Prices Climb to Record

Samed Olukoya

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

Comments

Crude Oil

Oil Prices Rebound on OPEC+ Output Delay Talks and U.S. Inventory Drop

Published

2 days ago

September 5, 2024

Samed Olukoya

Oil prices made a modest recovery on Thursday on the expectations that OPEC+ may delay planned production increases and the drop in U.S. crude inventories.

Brent crude oil, against which Nigerian oil is priced, rose by 66 cents, or 0.9% to $73.36 per barrel while U.S. West Texas Intermediate (WTI) crude appreciated by 64 cents or 0.9% to $69.84 per barrel.

The rebound in oil prices was a result of the American Petroleum Institute (API) report that revealed that the U.S. crude oil inventories had fallen by a surprising 7.431 million barrels last week, against analysts 1 million barrel decline projection.

The decline signals better than projected demand for the commodity in the United States of America and offers some relief for traders on global demand.

John Evans, an analyst at PVM Oil Associates, attributed the rebound in crude oil prices to the API report.

He said, “There is a pause of breath and light reprieve for oil prices.”

Also, discussions within the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, are fueling speculation about a potential delay in planned output increases.

The group was initially expected to increase production by 180,000 a day in October 2024.

However, concerns over softening demand in China and potential developments in Libya’s oil production have prompted the group to reconsider its strategy.

Despite the recent rebound, analysts caution that lingering uncertainties around global oil demand may continue to weigh on prices in the near term.

Energy

Power Generation Surges to 5,313 MW, But Distribution Issues Persist

Published

4 days ago

September 4, 2024

Samed Olukoya

Nigeria’s power generation continues to get better under the leadership of President Bola Ahmed Tinubu.

According to the latest statement released by Bolaji Tunji, the media aide to the Minister of Power, Adebayo Adelabu, power generation surged to a three-year high of 5,313 megawatts (MW).

“The national grid on Monday hit a record high of 5,313MW, a record high in the last three years,” the statement disclosed.

Reacting to this, the Minister of Power, Adebayo Adelabu, called on power distribution companies to take more energy to prevent grid collapse as the grid’s frequency drops when power is produced and not picked by the Discos.

He added that efforts would be made to encourage industries to purchase bulk energy.

However, a top official of one of the Discos was quoted as saying that the power companies were finding it difficult to pick the extra energy produced by generation companies because they were not happy with the tariff on other bands apart from Band A.

“As it is now, we are operating at a loss. Yes, they supply more power but this problem could be solved with improved tariff for the other bands and more meter penetration to recover the cost,” the Disco official, who pleaded not to be named due to lack of authorisation to speak on the matter, said.

On Saturday, the ministry said power generation that peaked at 5,170MW was ramped down by 1,400MW due to Discos’ energy rejection.

Crude Oil

Again NNPC Raises Petrol Price to N897/litre

Published

4 days ago

September 4, 2024

Investors King

The Nigerian National Petroleum Company (NNPC) Limited has once again increased the price of Premium Motor Spirit (PMS) from N855 per litre on Tuesday to N897 on Wednesday.

The increase was after Aliko Dangote, the Chairman of Dangote Refinery, announced the commencement of petrol production at its refinery.

The continuous increase in pump prices has raised concerns among Nigerians despite the initial excitement from the refinery announcement.

According to the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), the 650,000 barrels per day refinery will supply 25 million litres of petrol to the Nigerian market daily this September.

This, NMDPRA said will increase to 30 million litres per day in October.

However, the promise of increased fuel supply has not yet eased the situation on the ground.

Tunde Ayeni, a commercial bus driver at an NNPC station in Ikoyi, said “I have been in the queue since 6 a.m. waiting for them to start selling, but we just realised that the pump price has been changed to N897. This is terrible, and yet they still haven’t started selling the product.”

The price hike comes as NNPC continues to struggle with sustaining regular fuel supply.

On Sunday, the company warned that its ability to maintain steady distribution across the country was under threat due to financial strain.

NNPC cited rising supply costs as the cause of its difficulties in keeping up with demand.