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In the immediately preceding week, the international prices for LPG sloped upward while domestic prices for LPG continue to fall

Key Development in Nigeria's LPG Market
The international prices of LPG in the previous week continued to rise from the beginning and reached their maximum level towards the end of the week, however, it ended on a fallen note.
Depot prices continue to fall due to the federal government intervention to increase the local supply of LPG.
Due to the increase in the foreign markets price, the price gaps between prices at the depot level and those at the international level continue to be widened.
In the week under review, the price continues to decrease per kg of LPG and has been trending for the past few 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 in the South-West region has the highest price.

Macroeconomics Variables and the LPG Market

Inflation Rate and the LPG: Over the last 8 months, the rate of inflation has been steadily decreasing. It fell from 15.99% in October 2021 to 15.40% in November. The anticipated inflation rate for the month of December 2021 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 continues to rise from the beginning to the end of the week. It ranged from 412.0 to 412.49 in the week due to the adjustment made by the CBN to stabilize the 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 were at their lowest point at the end of the week after somewhat increases during 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 decreased slightly from $40.57 billion to $40.52 billion. This is due to the increase in the supply of dollars from the reserve to stabilize the exchange rate.

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

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
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. Members of the public should endeavour to take the vaccine in designated hospitals recommended by the federal government.

Outlook: Coming Weeks
The prices in the weeks to come may fall due to the increase in the local supply of LPG by the federal government.


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