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

Proshare

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

Grains

• Improved weather conditions will weigh on grain prices

Soft

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

Cocoa

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

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1.       Consumer Effective Demand Negatively Affected By Festive Spending

2.      Domestic Commodity Prices Have Reached Their Peak

3.      Prices of Christmas Sensitive Staple Foods Remain Sticky Downwards

4.      Domestic Commodity Prices Oblivious to a Falling Naira

5.      Domestic Food Prices May Have Reached a Plateau as Consumer Resistance Bites Harder

6.      Retailers Brace up for a Bleak Christmas

7.      Militants Disrupt a Potential 400,000bpd from Forcados Export terminal; Food Prices Remain Flat

8.     Oil Price Slips on OPEC Deal Concerns; Price of a Bag of Rice is Tapering

9.      Rise in Crude Oil Price to Boost Nigeria’s Revenue by 8.7%

10.  Commodity Prices Remain Relatively Unchanged

11.   Domestic Commodity Prices Tick Upwards In Spite of Expected Harvests

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

13.  Consumers Are Resisting Price Increases in the Retail Market - FDC

14.  Continuing Slide of the Naira Leading to Higher Prices of Inelastic Commodities

15.   Receding Weather Shocks Hand baton to Fundamentals

16.  Domestic Commodity Prices Remain Fairly Stable

17.   Potash Price Surge Could Lead To Higher Food Costs For Billions

18.  Domestic Commodity Prices Declining in the Last 24hours - FDC

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