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Prices on domestic markets for LPG relatively stable while the international markets for LPG fluctuated in the same week


Key Development in Nigeria's LPG Market
The international prices of LPG reached its peak at the initial period of the week while fluctuating but ended on a risen note.

Depot prices were relatively stable 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 April 2021 reduced from 18.17 to 18.12 in April 2021 (Fig D). From 12.8 in July 2020, to 13.2 in August 2020. The composite food index reduced from 22.95 in March 2021 to 22.72 in April 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 May is 15.4%. The relax of Covid-19 rule might contribute to the change in the rate of inflation trend.

Exchange Rate and the LPG: Exchange rate value from the CBN official site moved upward from N380 to 410/US.$1 throughout the week (Figure E), This followed the CBN action naira Devaluation. 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 relatively increased throughout the week (Figure F). This indicates that a risen price of crude oil in the international market results in increase in the cost of LPG. This signal a rise in price of the LPG market.

Foreign Reserves: As in the previous week, the Nigerian Gross Foreign Reserve increased from $34.40 billion to $34.20 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: Covid-19 causes demand of goods and services to fall due to the full or partial lock-down effect. The implication of the Covid-19 contracts the LPG market

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.



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