Increasing Consumer Resistance and Declining Income Is Taking Its Toll on Retail Prices


Friday, January 13, 2016 09:18AM /FDC

Increasing consumer resistance, changing preference and declining income is taking its toll on retail prices in January. This coincides with FDC Think Tank’s forecast of a slight dip in December inflation to 18.3%.

Rice and beans have shed over 20% in 2 weeks. We expect further declines as consumers switch to paying school fees from shopping malls.

OPEC’s deal is hanging in there with prices at $55pb. Nigeria is hoping for better production numbers than December’s level of 1.45mb.

The attached report summarizes the commodity price movements for this week.

Burning Economic Issues

• FG to roll out $300mn Diaspora Bond in March

• Gross external reserves level rose by $400mn in three days to $26.6bn

• Power supply to Nigerians in Q4’16 declined by 37% - NOI Polls

• Nigeria oil union suspends three-day nationwide strike after talks

• Inventory costs hit N100mn - MAN

Domestic Commodity Prices

•FDC projects December inflation to slow to 18.3%

•Base year effects largely responsible for the decline

•Diesel flat at N270/l

•Kerosene woes spreading

•Still trading within the band of N350/l - N400/l

•Parallel market rate depreciates to N492/$

•IFEM remains flat at N305/$

Stock Market  

•NSE ASI 0.15% (26,385.80)

•Market volatility to remain until results are released

Oil Prices

• Brent crude by 0.29% to $55.10pb

• Oil prices gained on weaker dollar

• Gains were capped by concerns over rising production in Libya and Iran

• US inventory increased by 4.1mb, significantly higher than analysts’ expectation of 1.6mb build-up

Oil Markets Today

Outlook – Oil Prices

• Bearish outlook for oil prices as OPEC strategy may prove counterproductive

• Libya has tripled production in the last 6 months, threatening OPEC plans

• Iran has moved approx. 13.2mb of oil from floating storage in the past 2 months

• EIA expects crude production in the US to increase by 110,000bpd to 9mbpd

Outlook – Agric Prices


• Improved weather conditions will weigh on grain prices


• Prices expected to trade higher on strong demand from bulk consumers


• Cocoa futures to slide on expectation of improved port arrivals at Ivory Coast

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12.  Naira Depreciates to N407/$ in the Parallel Market; Impact on Imported Commodities to be Felt in Sep

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