.

In the immediately preceding week, prices in the foreign market continue to decline but ended up rising in the previous week while domestic prices for LPG also inclined in the week under review

Key Development in Nigeria's LPG Market
The international prices of LPG in the previous week continue to fall from the beginning but made a u-turn at the end of the week.
Depot prices continue to increase throughout the week compared to the previous week.
Despite a somewhat higher price in foreign markets price, the price gaps between prices at the depot level and those at the international level have remained consistent.
In the week under review, the price continues to increase per kg of LPG and has been trading for the past 8 weeks.
Due to transportation costs and proximity to the coast, disparities in LPG retail pricing still exist across the country.

Regional Disparity in Retail
A daily feature of the Nigerian LPG market was regional variance in LPG prices across the country. Because of the in price speculation and living style, the LPG South-West region has the highest price.

Macroeconomics Variables and the LPG Market

Inflation Rate and the LPG: Over the last 5 months, the rate of inflation has been steadily decreasing. It fell from 17.38% in July to 17.01% in August 2021. (Fig D). From 18.17 in March 2021 to 18.12 in April 2021. The anticipated inflation rate for the month of September is 16.80%. The monetary measure put in place by the monetary authorities contributes to the fall in the rate of inflation trend. The composite food index reduced to 20.3% in August 2021 from 21.03% in July. It was 22.95% in March 2021 to 22.72% in April 2021, 20.57% in January 2021, 19.56% in December 2020, 15.48% in July 2020 compared to 15.18% in June 2020.

Exchange Rate and the LPG: The exchange rate fell from N410.83/$1 to 410.81/$1 at the end of the week due to the adjustment made by the CBN to stabilize naira against the dollar. The exchange rate is one of the factors that influence LPG prices on the international market. A higher exchange rate would boost the price of LPG on the local market by a considerable amount. This means that the LPG market is in a state of flux, Figure E.

Crude oil price and the LPG: The relationship between LPG price and crude oil price remains positive, as a by-product of crude oil. Crude oil prices fluctuated throughout the week but maintained a rising position from the middle of the week. (Figure F). This shows that the price of crude oil has not been stable in the international market. This reflects variability in the market price for LPG.

Foreign Reserves: As in the previous week, the Nigerian Gross Foreign Reserve increased slightly from $37.56 billion to $38.18 billion. This is due to an increase in the price of oil and assistance from external creditors to grant loans for infrastructure development.

PMI: The CBN Purchasing Managers Index (PMI) recorded overall growth in employment, business and inventory in the month of December while ordering in the category of supply for power, gas, steam and air conditioning remained stagnant while business operation & inventory were static in the same month at 45.7 per cent.

Current Topical Issues of the Week

Covid-19: Covid-19 causes demand for goods and services to fall due to the full or partial lock-down effect. The implication of the Covid-19 contracts to the LPG market

Policy Recommendations

Reducing the effect of the Covid-19 entails more campaigns and public awareness of the virus as people are easily carried away and relaxing. Vaccines for Covid-19 should be distributed without much delay if available.

Outlook: Coming Weeks

The prices in the weeks to come may rise due to the effect of an increase in the LPG price level from depot even though the month-on-month rate of inflation is reducing.


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