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Economy

U.K. Inflation Rate Rises to 15 Month High

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Bank of England Governor Mark Carney arrives to present the bank's quarterly inflation report news conference at the Bank of England in London

U.K. inflation rate rose to 15 month high in March as Easter boosted prices.

United Kingdom consumer prices rose 0.5 percent from a year earlier, according to office for National Statistics report released in London on Tuesday. This exceeded 0.4 percent forecasted by economists.

Core inflation which excludes volatile food and energy prices surges to 1.5 percent, the most in 16 months.

Although inflation rose more than expected, the overall market outlook remains weak and below the Bank of England’s 2 percent target.

“Dearer clothing and higher air fares, influenced by the timing of Easter, are behind the rise in CPI, which is still low by historic standards,” said ONS statistician Phil Gooding.

The better than expected increase in inflation did not mean interest rates would rise sooner than forecast said Ben Brettell, a senior economist at Hargreaves Lansdown.

All nine members of the Bank’s Monetary Policy Committee (MPC) voted last month to keep rates at current 0.5% record low.

This means U.K economy received only a temporary boost due to Easter spending which spur increase in prices especially airfares and clothing. Even though its positive for the economy at the moment its uncertain if it can be sustained going forward. Hence, pound buyers should pay attention to possible change in momentum.

The pound rose after the data was released, gaining 0.3 percent to $1.4319 as at 10:15 a.m. London time.

 

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Economy

FG Reduces Expenditure on JV Oil Assets by 62%

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NNPC

NNPC Lowers Spending on JV Oil Assets as Demand Drops

In a bid to reduce expenditure following a plunge in revenue generation, the federal government has cut down on spending on oil and gas assets currently being developed through a joint venture with private companies.

Federal Government lowered its expenses by 61.83 percent in the month of July, according to the latest report from the Nigerian National Petroleum Corporation.

The report showed NNPC, which has an obligation to make cash call payment for the development of the assets, only made $94.84 million or N34.14 billion cash call in July, down from $248.48 million or N89.45 billion in June.

The joint venture is managed by both the NNPC and private firms in proportion to their equity holdings and receives produced crude oil the same ratio.

This was largely due to the plunge in NNPC’s export receipt from $378.42 million in June to $122.44 million during the month under review.

“Of the export receipts, $67.45m was remitted to the Federation Account while $54.98m was remitted to fund the JV cost recovery for the month of July 2020 to guarantee current and future production,” it added.

In addition to the dollar allocation of $54.98 million to the JV cash call account, the naira portion of N14.35bn ($39.86m) was transferred to the account from domestic crude oil receipts in July, according to the NNPC.

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Economy

Nigeria: Bread Scarcity Rages As Bakers Strike in Lagos, Abuja Over Price Hikes

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Post Covid-19 Economy in Nigeria Sees Scarcity And Price hike in Bread Production

Residents of Abuja and Lagos are lamenting the increased scarcity in bread and a hike in its price as bakers went on strike to protest the hike in price of flour and other ingredients.

“I have asked around for bread but I can’t find any, and this is strange,” said Amos Idoko, a resident of Utako area in Abuja.

The strike affected roadside kiosk operations and families who rely on bread for a breakfast staple with many running out of bread last weekend across some communities surveyed in the FCT, Nasarawa and Niger state.

Some of the bakers said the strike started Friday and may end today, but there will be a hike in the price of bread.

A leader of the bakers group in the FCT and an official of Zuma Bread in Abuja, Abdullahi Muhammed, said the strike action was to protest the hike of flour and other ingredients for bread making.

Daily Trust reported exclusively recently that foreign-dominated flour millers have increased the price of flour for more than three times between March and August 2020, even with the COVID-19 pandemic.

“For instance, a bag of wheat flour sold between N10,000 and N12,000 last year now sells for N14,000,” he said

“Bag of sugar sold for about N11,000 last year now sells at N18,000. A 25-litre cooking oil previously N8,000 is now N15,000,” he said.

A dealer in wheat flour and baking ingredients in Kubwa – Abuja, Shehu Lawan, said dealers now rely on the parallel market to source for forex instead of the Central bank of Nigeria (CBN), making it difficult for them to maintain previous prices.

Lawan also said other issues that affect cost in bakery commodities, include government tax increment, cost of transport, among others.

In Lagos, Mr Ajao Ismail, who works at Royal Bite bakery in Palm Avenue of Mushin, said there was an earlier scarcity of bread in Lagos but that most bakers have resumed operations as of Sunday evening but with the bread price increasing.

“The market is dull at the moment because we have lots of bread that we have not sold. When there was scarcity, the demand was higher than the supply, now that most of the bakers are no longer on strike, there is more bread. People are reacting to the price.”

Ajao explained that the price of bread can return to how it was pre-COVID provided the government intervenes.

“If the government can work towards ensuring the price of flour, sugar, milk and butter is reduced to what it was in January 2020, we promise to reverse the price of bread to what it was.

“Bread now sold for N300/350 will return to N250 and the one sold for N500 will return to N400,” she noted.

The bakers had shut down for a number of days last week in Lagos. Premium Bread makers Association of Nigeria (PBAN) and Association of Master Bakers and Caterers Association of Nigeria (AMBAN) in briefing said the prices of ingredients

The spokesperson of PBAN, Emmanuel Onuoha, confirmed the scarcity. “If we don’t do this, people will think it is their right to buy cheap bread,” he said, adding that bakers now run at a loss even as most of them could no longer meet their loan repayment obligations.

It was also learnt that other states might also embark on the temporary cessation of production in response to the high cost of baking ingredients comprising flour, sugar, margarine, among others.

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Economy

FG Spends N10 Trillion on Petrol Subsidy in 14 Years – NNPC

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petrol Oil

NNPC Says FG Has Spent N10 Trillion on Petrol Subsidy in the Last 14 years

The Nigerian National Petroleum Corporation said the Federal Government spent a total sum of N10 trillion on petrol subsidy between 2006 and 2020.

This was disclosed on Saturday by Mele Kyari, the Group Managing Director, NNPC, during an interview on Liberty FM, Kaduna.

According to the NNPC boss, the federal government removed petrol subsidy because of the fraud perpetrated by some cabals in the oil industry.

He said the beneficiaries of petrol subsidies were marketers who smuggled federal government subsidised product into neighbouring countries for bigger gains.

The NNPC boss said these marketers made more profits by producing fake documents to collect subsidy for fuel they never imported or sold.

He said, “The crude oil is a global commodity and its price is not hidden. Everyone can calculate and know how much the cost of every final product from the crude at international market is.

“Since the inception of the country, the government has been paying subsidy on petrol to make it cheaper for Nigerians to buy below the cost price.

“This subsidy is designed to assist the masses of Nigeria; that is the intention, but in reality, the masses are not the beneficiaries. First, the masses are not the owners of the exotic cars buying fuel, owning the filling stations and doing the oil business.

“This subsidy that the government has been paying over the years is the root of all the atrocities and fraud committed in this country.

“If you look at it from 2006 till 2020, we have spent over N10tn on fuel subsidy. Apart from that, there is also subsidy on foreign currencies. Everybody knows how much is dollar in the market, but government is also subsidising it. So, this and the fuel subsidy within this period is around N14tn to N15tn.

“What was happening with the subsidy is that, some marketers were smuggling fuel to other neighbouring countries because it was cheaper in Nigeria due to the subsidy.

“Another one is those who use fake documents and bring to government to collect subsidy for fuel they never imported and the previous government was paying them.

“So, it was not the masses of Nigeria that were enjoying this subsidy except some cabals, who are rich and powerful.”

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