Economy

Inflation to Ease to 11.31% in February—FSDH

Published

7 years ago

13/03/2019

By Modupe Gbadeyanka

The research arm of Lagos-based financial institution, FSDH Merchant Bank, has said it expects inflation rate for the month of February 2019 to moderate to 11.31 percent from 11.37 percent recorded a month earlier.

In its Inflation Watch report, FSDH Research said the drop in inflation will defy electioneering spending, which was earlier predicted to contribute to a rise in the head inflation.

The National Bureau of Statistics (NBS) will release the inflation figure for the month of February on Friday, March 15, 2019, well ahead of the second Monetary Policy Committee (MPC) meeting of this year scheduled for March 25-26, 2019.

On February 23, 2019, Nigeria held the presidential and National Assembly elections, while on March 9, 2019, the governorship and state houses of assembly polls took place.

“If the inflation rate drops, can we expect a further drop in interest rates (yields) on fixed income securities? Or, can we expect members of the MPC of the Central Bank of Nigeria (CBN) to clap their hands for achieving stability in domestic prices and reduce policy rates?” the firm asked, saying it believes inflation rate in double digits, “as we predict it in 2019 and through 2022, may not justify a reduction in the monetary policy rates.”

“We believe there are many other issues that Nigerian economic managers need to address before the Nigerian economy can enjoy a low, as many people suggest, single digit interest rate,” the report said.

It further noted that, “When there is a general increase in the prices of goods and services, there is the tendency for suppliers (producers) to be happy as it should increase their profit.

“However, an increase in the general prices of goods is not good for consumers as it reduces their buying powers: the same amount of money cannot buy the same quantity of goods as it previously could.

“On the other hand, when there is a persistent decrease in the prices of goods and services, the profit of the suppliers (producers) will drop while the consumers’ ability to buy goods increases as a certain amount of money is enough to purchase more units of goods.

“Therefore, a balance in general prices of goods is needed to encourage both producers and consumers. This is why the CBN regularly modifies interest rate and yields to achieve a target range of inflation rate, currently put at 6 percent to 9 percent.”

FSDH Research the price monitor it conducted on certain food and non-food items in February showed that most prices increased at a slower rate in February than in January.

It said the slower pace of increase was an indication of an expected drop in the inflation rate in February.

“Our analysis shows the movements in the international food prices did not exert upward pressure on local prices in February.

“The report published by the Food and Agriculture Organization (FAO) of the United Nations for the month of February 2019 shows that food prices such as sugar, milk, butter, cheese, meat, oils, rice, wheat and maize increased on the international market.

“However, the value of the Naira strengthened against the Dollar during the month. The appreciation recorded in the Naira eliminated the impact of the increase in the international food prices on local prices.

“Although the inflation rate is trending downwards, FSDH Research stresses that certain economic realities may not guarantee a continued downward trend. The key limiting factors to a continued drop in the inflation rate are the need for adjustments to the current pricing regime of Petroleum Motor Spirit (PMS) and the electricity tariff.

“If these adjustments are carried out, government will save a certain amount of money that could and should be redirected to fund other critical sectors of the economy such as healthcare, education, security and infrastructure development.

“If this was the case, we would expect these adjustments to attract investments into those sectors. Although such adjustments may shift the inflation curve from its current level, the good news is that it may not go higher than 13 percent level.

“It is important to note that, if the Federal Government of Nigeria (FGN) implements these pricing adjustments, FSDH Research expects the average inflation rate of 2019 to be around the same average inflation rate of 2018. Meanwhile, the inflation rate would be substantially lower than it was in 2016 and 2017.

“Therefore, it may be better for Nigeria to remove ‘subsidies’ in both the energy and power sectors. We believe it would be a case of temporary pains and permanent gains.”

Economy

Nipco, 11 Plc Crash OTC Securities Exchange by 4.76%

Published

11 minutes ago

06/12/2025

Adedapo Adesanya

By Adedapo Adesanya

Energy stocks influenced the 4.76 per cent loss recorded by the NASD Over-the-Counter (OTC) Securities Exchange on Friday, December 5.

The culprits were the duo of 11 Plc and Nipco Plc,with the former shedding N32.17 to end at N291.83 per share compared with the previous day’s N324.00 per share, and the latter down by N21.00 to sell at N195.00 per unit versus the previous session’s N216.00 per unit.

Consequently, the NASD Unlisted Security Index (NSI) slumped by 170.16 points to 3,401.37 points from 3,571.53 points and the market capitalisation lost N101.81 billion to close at N2.035 billion from the N2.136 trillion quoted in the preceding session.

The OTC securities exchange suffered the decline yesterday despite the share prices of three companies closing green.

Central Securities Clearing System (CSCS) Plc was up by N1.80 to close at N39.80 per share compared with Thursday’s price of N38.00 per share, Air Liquide Plc appreciated by N1.09 to N11.99 per unit from N10.90 per unit, and FrieslandCampina Wamco Nigeria Plc grew by 78 Kobo to N56.57 per share from N55.79 per share.

During the session, the volume of transactions rose by 6,885.3 per cent to 18.2 million units from 4.3 million units, the value of transactions ballooned by 10,301.7 per cent to N389.7 million from N347.2 million, but the number of deals declined by 29.7 per cent to 26 deals from 37 deals.

Infrastructure Credit Guarantee Company (InfraCredit) Plc ended the day as the most traded stock by value on a year-to-date basis with 5.8 billion units worth N16.4 billion, followed by Okitipupa Plc with 170.4 million units valued at N8.0 billion, and Air Liquide Plc with 507.5 million units worth N4.2 billion.

InfraCredit Plc also finished the day as the most traded stock by volume on a year-to-date basis with 5.8 billion units transacted for N16.4 billion, followed by Industrial and General Insurance (IGI) Plc with 1.2 billion units sold for N420.2 million, and Impresit Bakolori Plc with 536.9 million units worth N524.9 million.

Economy

Naira Depreciates to N1,450/$1 at Official Forex Market

Published

27 minutes ago

06/12/2025

Adedapo Adesanya

By Adedapo Adesanya

The Naira depreciated further against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday, December 5, as FX demand pressure mounts.

The Nigerian currency lost N2.60 or 0.18 per cent against the greenback to close at N1,450.43/$1 compared with the previous day’s N1,447.83/$1.

Equally, the domestic currency declined against the Pound Sterling in the official forex market during the session by N4.48 to trade at N1,935.45/£1, in contrast to Thursday’s closing price of N1,930.97/£1 and shrank against the Euro by 43 Kobo to end at N1,689.17/€1 versus the preceding session’s rate of N1,688.74/€1.

Similarly, the local currency performed badly against the US Dollar at the GTBank FX counter by N2 to close at N1,455/$1 versus Thursday’s N1,453/$1 but traded flat at the parallel market at N14.65/$1.

As the country gets into the festive period, pressure mounted on the local currency reflecting higher foreign payments and lower FX inflows.

However, there are expectations that the Nigerian currency will be stable, supported by interventions by to the Central Bank of Nigeria (CBN) in the face of steady dollar Demand and inflows from Detty December festivities that will give the Naira a boost after it depreciated mildly last month.

Traders cited by Reuters expect that the Naira will trade within a band of N1,443-N1,450/$1 next week, buoyed by improved FX interventions by the apex bank.

As for the crypto market, it was down yesterday due to profit-taking associated with year-end trading. However, the December 1-Year Consumer Inflation Expectation by the University of Michigan fell to 4.1 per cent from 4.5 per cent previously and 4.5 per cent expected. The 5-Year Consumer Inflation Expectation fell to 3.2 per cent from 3.4 per cent previously and 3.4 per cent expected.

With the dearth of official economic data of late, these private surveys have taken on a new level of significance and the market banks of them to make decisions.

Cardano (ADA) depreciated by 5.7 per cent to $0.4142, Dogecoin (DOGE) slid by 5.1 per cent to $0.1394, Ethereum (ETH) dropped by 3.9 per cent to $3,039.75, Solana (SOL) declined by 3.8 per cent to $133.24, and Litecoin (LTC) fell by 3.7 per cent to $80.59.

Further, Bitcoin (BTC) went down by 2.6 per cent to sell at $89,683.72, Binance Coin (BNB) slumped by 2.2 per cent to $883.59, and Ripple (XRP) shrank by 2.1 per cent to $2.04, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.

Economy

Oil Market Climbs on Federal Reserve Rate-Cut Signals, Supply Concerns

Published

45 minutes ago

06/12/2025

Adedapo Adesanya

By Adedapo Adesanya

The oil market was up on Friday on increasing expectations the US Federal Reserve will cut interest rates next week, which could boost economic growth and energy demand.

Brent futures rose by 49 cents or 0.8 per cent to $63.75 per barrel and the US West Texas Intermediate (WTI) futures expanded by 41 cents or 0.7 per cent to $60.08 per barrel.

Investors digested a US inflation report and recalibrated expectations for the Federal Reserve to reduce rates at its December 9-10 meeting.

US consumer spending increased moderately in September after three straight months of solid gains, suggesting a loss of momentum in the economy at the end of the third quarter as a lackluster labor market and the rising cost of living curbed demand.

Traders have been pricing in an 87 per cent chance that the US central bank will lower borrowing costs by 25 basis points next week, according to CME Group’s FedWatch Tool.

Investors also focused on news from Russia and Venezuela to determine whether oil supplies from the two sanctioned members of the Organisation of the Petroleum Exporting Countries and allies (OPEC+) will increase or decrease in the future.

The failure of US talks in Moscow to achieve any significant breakthrough over the war in Ukraine has helped to boost oil prices so far this week.

A loss of Venezuelan oil production in case of a US military intervention will materially impact global benchmark prices as the market will have to replace Venezuela’s heavy crude.

Venezuela is estimated to pump about 1.1 million barrels per day of crude oil at present, so if the US-Venezuela tension escalation into an invasion in the South American country, this volume of crude would be at risk.

Reuters reported that the Group of Seven countries and the European Union are in talks to replace a price cap on Russian oil exports with a full maritime services ban in a bid to reduce the oil revenue that helps finance Russia’s war in Ukraine.

Any deal that could lift sanctions on Russia, the world’s second-biggest crude producer after the US, could increase the amount of oil available to global markets, weakening prices.