.

Prices have shown a slight rise in the international and domestic markets for LPG in the immediately preceding week.

Key Developments in Nigeria's LPG Market
• International (Mont Belvieu) prices of LPG maintained a general rise throughout the week under review. Compared to records from the previous week, this trend is reflective of a gradual return to normalcy in the international market.
• Prices of LPG at the depot level is continuing a consistent fall from what was recorded in the previous week.
• With a general drop in retail price compared to last week, what we see is a general drop in prices across the value chain in the domestic market
• Regional disparities in the retail prices within the country continue to persist.

Regional Disparity in Retail Prices
Regional disparity in the prices of LPG across the country has been a regular feature of the Nigerian LPG market. Though the South-south geopolitical zone hosts the great majority of depots in the country due to its proximity to the ocean, prices have been highest in the region.

Macroeconomics & the LPG Market
• The exchange value of the naira to the US. $ has remained stable at N380 to US.$1 throughout the week (Figure D). This is happening in the midst of severe shortage of the US. dollar.
• Inflation is continuing its rise consistently for more than 6 months. The latest report from the Nigeria Bureau of Statistics(NBS) shows that the headline inflation rate settled at a 27-month high of 12.82% y/y for the month of July, 26bps up from 12.56% y/y in June. The combined rise in LPG prices in the international market and the recent inflationary trend might mean higher overall prices in the weeks and months to come.
• The NBS also reports that there is a 6.10% decline y/y in real GDP growth for the 2020 Q2 GDP. Much of the decline would have come from the COVID-19 pandemic-induced lockdown.
• Prices of crude oil in the international market in the week under review showed a general upward trend, though a decline had commenced from mid-week(Figure E).

Outlook: Coming Weeks
• The easing off of the oversupply situation in the international market for Natural gas will likely continue to rase prices in the weeks to come.
• The twin effect of a drop in over-supply and the recent jump in the value of the US. dollar after the meeting of the Fed. might signal a further rise in LPG prices internationally.

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