.

Prices on domestic markets for LPG were relatively stable while they fluctuated at a decreasing rate in the international markets in the same week.


Key Development in Nigeria's LPG Market
The international prices of LPG were on a fallen note in the previous week after reaching their peak on Tuesday.
Depot prices were observed on a decreased note compared to the previous week.
The narrowing disparities between prices at the depot level and those at the international level still persist.
Price changes per kg of LPG in the week under review and in the past few weeks have increased in the week under review.
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 a 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: Inflation has consistently fallen over the last seven months. It fell from 16.63% in September to 15.99% in October 2021, (See Illustration D). Coupled with the high prices of goods and services in the month of November 2021, the expected inflation rate is 17.2%. In April 2021, it fell from 18.12% to 17.93%. in May 2021 The composite food index reduced to 18.34% in October from 19.57% in September 2021, 20.57 per cent in January 2021, 20.30% in August 2021, and 15.48 per cent in July 2020, compared to 15.18 per cent in June 2020. For the month of May, a 15.4 per cent inflation rate is expected. The relaxation of the Covid-19 rule may have influenced the inflation rate trend..

Exchange Rate and the LPG: Exchange rate value from the CBN official site ranged from N411.64/$1 rate to 411.74/$1 in the previous week. (Figure E). This followed the CBN action to stabilise the economy. 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 reached their lowest level in the middle of the week but ended up risen in the previous week (Figure F). This indicates the unstable price of crude oil in the international market results in imbalances in the cost of LPG. This signal a rise in the price of the LPG market.

Foreign Reserves: Compare to the previous week, the Nigerian Gross Foreign Reserve decreased from $41.30 billion to $41.08 billion amid falls in the crude oil prices and rising rate of the Naira at N411.64 to 411.74/US$1. This will signal to the investors and the country's creditors the strength of naira and the 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 per cent in the same month.

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 the LPG market.
Omicron Variant: A new strain of COVID-19 recently detected in southern Africa as a “variant of concern” by the World Health Organization is also no doubt causing concern among the world leaders. The implication of this variant contracts the LPG market if not curtailed early.

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 a 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 high demand for energy during winter


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