.

In the immediately preceding week, prices on domestic showed some levels of depreciation while the international markets for LPG fluctuated at decreasing rate in the same week


Key Development in Nigeria's LPG Market
The international prices of LPG fluctuated throughout the week but ended on a risen note.
Depot prices continuously dropping till the end of the week compared to the previous week.
The narrowing disparities between prices at the depot level and those at the international level still persists.
Price changes per kg of LPG in the week under review and in the past few weeks have remained within the limited range.
Regional disparities in the retail prices of LPG within the country continue to persist.

Regional Disparity in Retail
Regional disparity in the prices of LPG across the country has been a regular feature of the Nigerian LPG market. There is wide gap between the South East and South-west prices, this is due to its distance from the coastal region, has the highest prices due to distance from the coastal regions.

Macroeconomics Variables and the LPG Market

Inflation Rate and the LPG: There has been a continuous rise in the rate of inflation in the past 13 months. The rate of inflation in January 2021 increased from 16.47 to 17.33 in February 2021 (Fig D). From 14.89 in November, to 15.75 in December 2020. The composite food index rose to 21.79 in February 2021, 20.57 in January 2021, 19.56 in December 2020, 15.48 percent in July 2020 compared to 15.18 percent in June 2020. The anticipated inflation rate for the month of March is 14.37%. The post effect of Covid-19 and border policies against essential goods, are contributing to the growing trend.

Exchange Rate and the LPG: Exchange rate value from the CBN official site still persistent at N380 to US.$1 throughout the week (Figure E), even as disparities continue to widen in the parallel market. The exchange rate is one of the variables that determine the price of LPG in the international market. A higher exchange rate will add to the cost price of the LPG. This reduces LPG in the market.

Crude oil Price and the LPG: As a by-product of crude oil, the relationship between the LPG price and crude oil price is positive. The Prices of crude oil in the international market were on a risen note throughout the week. (Figure F). This indicates that an increase in the price of crude oil in the international market results in an increase in the cost of LPG. This signal a high price to the LPG market.

Foreign Reserves: As in the previous week, the Nigerian Gross Foreign Reserve increased from $35.03 billion to $35.19 billion amid the devaluation and pegging of the Naira at N380 to US$1. This will signal to the investors and country's creditors the strength of naira and ability to repay debt.

PMI: The Purchasing Managers Index (PMI) of the CBN recorded overall growth in jobs, business activities, and inventory in the gas sector in December, while orders remained stagnant in the Electricity, gas, steam & air conditioning supply segment, while Business Activities and employment & inventory remained 45.7 percent in the same month.

Current Topical Issues of the Week
Covid-19: The effect of Covid-19 still persist as not all Federal Schools have fully resumed while the State universities are taken caution to prevent the spread of the virus. The implications of this on the LPG market is that its volume of sales will not increase in the areas where schools are not yet resumed.
Ramadan Period: Muslims all over the world are currently observing fasting as ordained in the Holy Quran by God. The rate of cooking at home increases during the period and many households who are Muslims are already prepared to avoid disappointment from unreliable cooking energy. Muslims in Nigeria were observed filling their gas cylinders in order to have access to fast cooking energy. This fasting will last for a period of one month, and it is anticipated that demand for cooking gas will increase during the period.

Policy Recommendations
To reduce the effect of the Covid-19 on the economy, there should be a constant awareness programme through the media and places of worship; and also vaccine for Covid-19 should be made available for everybody

Outlook: Coming Weeks
The prices in the weeks to come may rise due to the persistent increase in the rate of inflation


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