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Economy

Bread Price Hike Imminent—Bakers

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By Modupe Gbadeyanka

Nigerians may soon have to pay more to purchase a loaf of bread at the market if feelers from the Premium Bread Makers Association of Nigeria (PBAN) are anything to go by.

The association disclosed at a press briefing on Monday in Lagos that there are strong indications consumers will have to cough out more money to eat bread.

This is because prices of the key ingredients used in baking bread have increased and to break-even, makers of bread must add more to the current cost of the commodity, which is a stable food in the country.

According to PBAN, between 2015 and 2018, the price of flour had increased from N6,500 to N11,500 per 50kg bag, while sugar had seen 77 percent rise in price in the same period, with salt, margarine, yeast and preservatives had recorded 84 percent, 67 percent, 112 percent, 45 percent and 137 percent increases, respectively.

Also, the price of diesel, which is used to power factory generators on a 24-hour basis, had gone up by 57 percent, while the price of improvers used in enhancing the quality of bread had risen by 160 percent during the period, the association stated, adding that conversely, the price of bread had only witnessed 11 per cent rise within the period.

At the moment, the average loaf of bread costs about N350 and with this warning, consumers may have to pay at least N400.

“The challenges we face as a result of the incessant increase in the prices of baking ingredients have rendered most premium bakeries comatose making us to operate at a loss,” President of the association, Mr Jemide Tosan, lamented at the briefing yesterday.

According to him, “Given the current situation, most premium bakeries may be forced to embark on a price increase, which will further make bread unaffordable to the common man.”

However, he assured that, “As an association, we are totally committed to ensuring that Nigerians have healthy, quality, affordable and harmless bread on their tables.”

Mr Tosan disclosed that in the past three years, prices of flour, sugar and other baking ingredients had increased threefold without a corresponding increase in the prices of premium bread by its members.

“Most of us got loans with double-digit interest rates from financial institutions to fund our bakery projects and are finding it extremely difficult to meet our loan repayment obligations,” Mr Tosan disclosed.

Modupe Gbadeyanka is a fast-rising journalist with Business Post Nigeria. Her passion for journalism is amazing. She is willing to learn more with a view to becoming one of the best pen-pushers in Nigeria. Her role models are the duo of CNN's Richard Quest and Christiane Amanpour.

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Economy

JUST IN: CBN Raises Benchmark Interest Rate to 13%

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By Dipo Olowookere

For the first time in two years, the Monetary Policy Rate (MPR) has been raised by the Central Bank of Nigeria (CBN) to 13.0 per cent from 11.5 per cent.

Mr Godwin Emefiele, the Governor of the CBN, who announced this development on Tuesday in Abuja, explained that the decision to increase the benchmark interest rate was taken at the Monetary Policy Committee (MPC) meeting held yesterday and today.

While addressing financial reporters this afternoon, Mr Emefiele said members of the committee were unanimous with the decision to hike the rates as it was the best thing to do after holding them for about two years.

However, the other parameters were left unchanged by members at the gathering as the Asymmetric corridor remained around the MPR at +100/-700bps, the Cash Reserve Ratio (CRR) at 27.5 per cent and the Liquidity Ratio (LR) at 30.0 per cent.

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Economy

Nigeria’s GDP Grows by 3.11% in Q1, What Next?

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By Lukman Otunuga

There are two ways one could interpret Nigeria’s latest Gross Domestic Product (GDP) figure of 3.11% in Q1 of 2022.

The optimists will say the country’s economy grew for the sixth consecutive quarter in Q1 while pessimists may highlight how economic growth slowed for the third consecutive quarter.

Either way, Nigeria’s economy continues to display resilience against external and domestic risks. With the improvement in the non-oil sector driving growth, this may brighten the growth outlook. But could these be signs of Nigeria breaking away from the chains of oil reliance to derive growth from sustainable sources? It may be too early to come to any meaningful conclusion. However, the report is encouraging and illustrates progress made by the country in reclaiming stability post-Covid-19.

With economic conditions somewhat improving, the Central Bank of Nigeria (CBN) is unlikely to raise interest rates this week. Given how Africa’s largest economy has been able to maintain growth in the past six quarters on the back of loose monetary policies by the CBN, a rate hike could disrupt Nigeria’s economic recovery.

As the global war against inflation rages on, central banks are stepping up.

However, the CBN is likely to remain on the sidelines for now. Nevertheless, inflation is still a cause for concern with consumer prices accelerating for the third straight month to 16.82% in April 2022.

With the general elections around the corner, pre-election spending could translate to rising price pressures. On top of this, the widening policy divergence between the Federal Reserve and the CBN could punish the Naira.

It’s worth keeping in mind that the dollar remains heavily supported by aggressive Fed rate hike bets and is likely to remain strong for the rest of 2022. A powerful dollar is bad news for emerging market currencies including the Naira which continues to depreciate in both the official and unofficial markets.

Lukman Otunuga is the Senior Research Analyst at FXTM

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Economy

NGX All Share Index Weakens Further by 0.13%

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All-Share Index

By Dipo Olowookere

The bearish sentiment on the floor of the Nigerian Exchange (NGX) Limited continued on Monday as the bourse further depreciated by 0.13 per cent.

Sustained profit-taking especially in the industrial goods sector contributed to the decline suffered during the session as the All Share Index (ASI) slumped by 68.45 points to close at 52,911.51 points compared with the previous session’s 52,979.96 points.

As for the market capitalisation, it depreciated by N37 billion amid sell-offs in 24 stocks to settle at N28.525 trillion as against last Friday’s closing value of N28.562 trillion.

On the first trading day of this week, the insurance sector depleted by 2.32 per cent, the industrial goods sector fell by 0.09 per cent, while the energy, banking and consumer goods counters increased by 0.28 per cent, 0.10 per cent and 0.05 per cent respectively.

Presco led the losers’ chart yesterday with a price decline of 10.00 per cent to trade at N180.00, Global Spectrum Energy Services lost 9.97 per cent to finish at N3.07, Neimeth fell by 9.66 per cent to N1.59, UAC Nigeria depreciated by 8.33 per cent to N13.20, while NEM Insurance retreated by 7.74 per cent to N4.05.

The gainers’ log had 22 members on Monday, with Conoil leading after its value improved by 9.95 per cent to N34.25. MRS Oil gained 9.93 per cent to quote at N14.95, McNichols appreciated by 9.86 per cent to N2.34, Academy Press increased its price by 9.76 per cent to N1.35, while NPF Microfinance Bank expanded by 8.02 per cent to N2.02.

On the activity chart, a total of 263.3 million stocks worth N3.6 billion exchanged hands in 4,856 deals during the session compared with 436.6 million stocks worth N3.2 billion bought and sold in 4,716 deals in the preceding session. This implied that the volume of trades depreciated by 39.68 per cent, while the value of trades and the number of deals increased by 10.15 per cent and 2.97 per cent respectively.

Jaiz Bank closed the day as the most active stock with the sale of 114.0 million units valued at N101.8 million, GTCO transacted 12.9 million shares for N302.8 million, Transcorp exchanged 12.8 million stocks worth N16.7 million, Access Holdings traded 11.7 million equities valued at N115.7 million, while Zenith Bank sold 8.6 million shares for N207.0 million.

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