Economy
Inflation to Marginally Drop to 15.91% in October—FSDH
By Modupe Gbadeyanka
Data released last month by the National Bureau of Statistics (NBS) revealed that inflation in the month of September 2017 declined to 15.98 percent from 16.01 percent in August, though food prices still remained high.
For the month of October 2017, which is due for release by the NBS later this month, precisely on Saturday, November 18, 2017, analysts at FSDH are predicting a marginal fall in the rate.
According to its Inflation Watch report released on Thursday, FSDH Research says it expects the inflation rate (year-on-year) to drop to 15.91 percent in October 2017 from 15.98 percent reported in the month of September 2017.
It explained that the expected marginal decline in the inflation rate is premised on slower increase in the food and non-food divisions, compared with the previous month.
FSDH Research said the monthly Food Price Index (FPI) released on Thursday by the Food and Agriculture Organization (FAO) showed that the Index averaged 176.4 points, 1.26 percent lower than the revised value for September 2017, but 2.45 percent higher than the October 2016 figure.
According to the FAO, all categories of commodities used in the calculation of the Index dropped in value with the exception of cereal.
The FAO Dairy Index fell by 4.19 percent from September 2017 as the prices of butter, skim milk powder (SMP) and whole milk powder (WMP) eased in October.
The FAO Vegetable Oil Price Index was down by 1.06 percent. This was as a result of abundant inventory levels of soy and palm oil in Malaysia, Southeast Asia and the United States of America coupled with a favourable outlook for global supply in 2017/18.
The FAO Meat Price Index was down by 0.9 percent as prices of ovine and pig meat declined due to reduced import demand. The FAO Sugar Price Index was down by 0.67% in October 2017 on the heels of reports on improved supply conditions in 2017/2018 in the main sugar producing region of Brazil.
Also, a weaker Brazilian Real and the slowdown in demand from China weighed down on the value of the Index.
On the flip side, the FAO Cereal Price Index was up by 0.65 percent in October 2017 as a result of the increase in the prices of rice and maize. Increased competition amongst exporters and sufficient supplies weighed on the prices of wheat.
FSDH said its analysis indicates that the value of the Naira depreciated at the inter-bank market, while it appreciated at the parallel market. The Naira lost by 0.02% at the inter-bank market to close at $/N305.80 while it gained 0.83 percent at the parallel market to close at $/N362.50 at the end of October.
The Naira appreciation in the parallel market and the drop in the prices of food at the international market led to a drop in the prices of some consumer goods in Nigeria.
The prices of most of the food items we monitored in October 2017 moderated downwards, while a few items recorded price appreciation. The movement in the prices of food items during the month resulted in 0.85 percent increase in our Food and Non-Alcoholic Index to 256 points.
“Our Food and Non-Alcoholic Index increased by 20.24 percent from 212.90 points in October 2016. We also noticed increase in the prices of Housing, Water, Electricity, Gas & Other Fuels divisions between September 2017 and October 2017.
“Our model indicates that the general price movement in the consumer goods and services in October 2017 increased the Composite Consumer Price Index (CCPI) to 243.04 points, representing a month-on-month increase of 0.77 percent.
“We estimate that the increase in the CCPI in October 2017 would produce an inflation rate of 15.91 percent marginally lower than the 15.98 percent recorded in September 2017, the firm said.
By Dipo Olowookere
The first trading session of the week on the floor of the Nigerian Exchange (NGX) Limited ended in the green territory on Monday, with a 1.20 per cent rise.
This was buoyed by the gains recorded by Airtel Africa and other equities, according to analysis of data harvested from the Customs Street yesterday.
During the trading day, the consumer goods index grew by 0.76 per cent, enough to offset the losses recorded by the other sectors.
The insurance counter shrank by 1.64 per cent, the banking space lost 0.24 per cent, the energy sector contracted by 0.09 per cent, and the industrial goods segment retreated by 0.05 per cent.
When trading activities ended for the day, the All-Share Index (ASI) was up by 2,956.15 points to 248,529.75 points from 245,573.60 points, and the market capitalisation gained N1.909 trillion to finish at N160.422 trillion compared with the previous session’s N158.513 trillion.
Fortis Global Insurance expanded by 10.00 per cent to N2.86, Chams surged by 9.80 per cent to N4.48, NAHCO jumped by 9.29 per cent to N153.00, Airtel Africa soared by 8.59 per cent to N6,300.00, and Sovereign Trust Insurance rose by 6.59 per cent to N1.78.
Conversely, AVA Capital shed 10.00 per cent to N9.90, Ecobank decreased by 9.92 per cent to N64.95, Caverton crashed by 9.09 per cent to N5.00, Ikeja Hotel slipped by 8.41 per cent to N43.00, and FTN Cocoa dropped 8.37 per cent to trade at N8.10.
A total of 23 equities were on the gainers’ chart yesterday, while 37 equities ended on the losers’ table, indicating a negative market breadth index and weak investor sentiment.
As for the activity log, the trading volume remained elevated, though lower than the preceding session, as it receded by 26.67 per cent to 1.1 billion units from 1.5 billion units. The trading value, however, increased by 1.12 per cent to N27.0 billion from N26.7 billion, while the number of deals advanced by 39.00 per cent to 59,185 deals from 42,580 deals.
Consolidated Hallmark was the most active stock yesterday, with a turnover of 354.1 million units valued at N1.5 billion, Fortis Global Insurance traded 307.3 million units worth N818.3 million, Access Holdings exchanged 48.1 million units for N1.4 billion, Chams transacted 37.4 million units worth N163.3 million, and First Holdco sold 35.8 million units valued at N5.1 billion.
By Adedapo Adesanya
Oil prices traded 5 per cent higher on Monday after Iran and the United States argued about demands for compensation, further stalling a possible deal to reopen the Strait of Hormuz.
Brent crude futures chalked up $4.17 or 4.99 per cent to sell at $87.72 a barrel, while the US West Texas Intermediate (WTI) crude futures surged $3.95 or 5.05 per cent to $82.13 per barrel.
Iran said the US must lift sanctions on it and meet other conditions for reopening the vital waterway, which carried a fifth of the world’s oil and liquefied natural gas before the start of the Middle East conflict in late February.
Meanwhile, US President Donald Trump said Iran must pay compensation for “all of the people that they have killed and gravely wounded.”
This comes as the Middle East country said it was nearing a final pact with Oman to define new shipping lanes through the strait but repeated that the US must meet other conditions, including compensation and an end to sanctions and military threats before the strategic waterway is reopened.
In a further threat to supply, the Iran-aligned Houthis said they had struck Saudi Aramco’s Jazan refinery on Sunday. Saudi Aramco has postponed the restart of the 400,000-barrel-per-day refinery to August 30 after two Houthi attacks in recent weeks.
ADNOC, a state-owned oil company in the United Arab Emirates, said on Friday that 15 of its vessels had been attacked while transiting the Strait of Hormuz since the beginning of the conflict.
Meanwhile, Ukraine’s military continued to attack Russia’s energy infrastructure, hitting the Taneco oil refinery in Tatarstan and the ZapSibNeftekhim petrochemical plant in Russia’s Tyumen region.
On the US supply side, stocks of crude oil in the Strategic Petroleum Reserve (SPR) fell by about 6.1 million barrels to 298.7 million barrels last week, the lowest level since January 1983.
Bank of America (BoFA) warned that oil prices could continue climbing into the winter if the US and Iran fail to reach an agreement reopening the Strait of Hormuz, with severe shortages already emerging in diesel, petrol, and global natural gas markets.
Mr Francisco Blanch, Bank of America’s head of commodities and derivatives research, told CNBC on Monday that only around 5 to 10 ships per day are currently passing through Hormuz, compared with roughly 140 before the war. With some crude now being rerouted through Saudi Arabia and the UAE, traffic would need to recover to around 80 to 100 ships per day just to stabilise energy markets.
By Adedapo Adesanya
The Senate Committee on Banking, Insurance and Other Financial Institutions has called for stronger collaboration among financial sector regulators and other stakeholders to strengthen Nigeria’s financial system and support sustainable economic growth.
The committee made the call during an expanded stakeholders’ engagement in Lagos, attended by the leadership of the Central Bank of Nigeria (CBN), Nigeria Deposit Insurance Corporation (NDIC), Asset Management Corporation of Nigeria (AMCON), National Insurance Commission (NAICOM) and Nigeria Export-Import Bank (NEXIM), among other industry stakeholders and financial experts.
Chairman of the committee, Mr Adetokunbo Abiru (Lagos East), who was represented by Mr Osita Izunaso (Imo West), said stronger legislative reforms and regulatory collaboration were necessary to reposition Nigeria’s financial architecture for long-term economic prosperity.
Mr Abiru said the financial sector remained critical to investment, job creation, business expansion and macroeconomic stability, stressing that its ability to mobilise savings, channel credit to productive sectors, facilitate investment and manage risks was fundamental to sustainable economic growth.
He said the current economic realities required closer collaboration between the legislature and financial regulators, noting that challenges confronting the sector were interconnected and could not be effectively addressed through isolated interventions.
The lawmaker identified inflationary pressures, global economic uncertainties, cybersecurity threats, low insurance penetration and the need to diversify Nigeria’s export base as some of the challenges requiring coordinated policy responses.
He said the engagement was aimed at generating practical solutions to strengthen the country’s financial architecture and support sustainable economic growth.
According to him, monetary policy, financial safety nets, banking institutions, the insurance industry and export finance were interdependent components of a stable financial system and must therefore be strengthened collectively.
The Commissioner for Insurance and Chief Executive Officer of the National Insurance Commission (NAICOM), Mr Olusegun Ayo Omosehin, said the Nigeria Insurance Industry Reform Act (NIIRA) 2025 had contributed significantly to stabilising and repositioning the insurance sector.
Mr Omosehin disclosed that 43 insurance companies had successfully recapitalised, describing the development as a major milestone for the industry.
He commended Abiru and members of the committee for their role in advancing insurance sector reforms and urged the House of Representatives to expedite action on the relevant insurance reform bill to enable it to receive presidential assent and become operational.
Representatives of the CBN Governor and the Managing Directors of AMCON, NEXIM and NDIC also commended the Senate committee for its oversight and legislative support, saying its interventions had strengthened the agencies’ capacity to discharge their statutory mandates.
The engagement, held under the theme, Strengthening Financial System Architecture for Sustainable Economic Growth and Stability in Nigeria, also featured presentations by Professor Uche Uwaleke, President of Capital Market Academics of Nigeria (CMAN); Professor Biodun Adedipe, Chief Consultant, B. Adedipe Associates Limited; and Dr Tilewa Adebajo, Chief Executive Officer of CFG Advisory.
The experts presented policy recommendations on key issues affecting Nigeria’s financial system, with emphasis on financial stability, investment and sustainable economic growth.
Mr Abiru said the Senate would continue to engage financial regulators and other stakeholders to deepen financial inclusion, strengthen public confidence in financial institutions and improve regulatory effectiveness.
He said the broader objective was to position Nigeria’s financial system to compete more effectively in the global economy while remaining resilient and responsive to the country’s economic transformation agenda.
