Economy

Sticky Food Prices Limit Headline Inflation Moderation at 16.05%

Published

8 years ago

29/08/2017

By Cordros Research

Yesterday, the National Bureau of Statistics (NBS) released the Consumer Price Index (CPI) report for the month of July, showing that Nigeria’s inflation rate increased by 16.05 percent y/y, 5 bps lower than the 16.10 percent recorded in June, marking the sixth successive y/y decline in the headline index.

Broadly in line with our forecast, albeit 10 bps ahead of Bloomberg’s compiled average estimate of 15.95 percent, the inflation figure is consistent with the sense that the base effect driven moderation expected at the beginning of the year has waned.

Again, the fact that the headline index came above consensus, as has been the trend thus far this year, further corroborates the case that prices remain sticky downward. Good to mention, however, the month-on-month price increase of 1.21 percent, 37 bps lower than June’s 1.58 percent, is the second consecutive m/m moderation recorded thus far in 2017, and the lowest since January (1.01 percent).

On average, from end-2016 level, month-on-month inflation has increased by 1.50 percent, 22 bps higher than the 1.28 percent average recorded in the seven months to December 2016.

While it may be argued that the persisting inflationary pressure again supports the central bank’s Monetary Policy Committee’s (MPC) case of holding the line on its policy stance, we think the Committee’s subsequent decisions will largely be influenced by its considerations of inflation volatility and expectation, rather than inflation itself.

As shown in a recent study by the apex bank, “Modelling Inflation Rate Volatility in Nigeria with Structural Breaks”, inflation level in an economy may not really be what matters strictly but inflation volatility, and fiscal policies importantly affect the latter.

The study guides that inflation only causes high inflation volatility only in a situation where monetary policy is dominated by fiscal policy and the government deficit cannot be predicted. That partly confirms the MPC’s persistent call on the fiscal authority to pursue complementary policies that support fiscal-monetary policy harmony.

Downplaying the likelihood of a rate hike, despite identified likely risks to banking system liquidity amid anticipated fiscal injections over H2-2017, the MPC clearly noted that additional tightening will widen the income gap, weigh down aggregate consumption, and further constrain credit to the real sector of the economy.

Strengthening the case for a rate cut, on the other hand, a critical assessment of the Committee’s considerations in its last meeting reveals that, unlike in May – where members expressed uncertainty around key economic activities particularly food production – expectation is for a robust harvest season capable of subduing the rate of price increase on the food component, which is expected to combine with continued moderation in core inflation to ease the pressure on the headline index.

That said, we suspect a rate cut is unlikely to be earlier than November when output growth would have comfortably returned to the positive value, inflation rate would have decelerated close to the empirically established 10 percent – 12.5 percent threshold for Nigeria, and exchange rate stability would have been relatively consolidated.

Notably, consistent with observed trend this year, all classification of Individual Consumption by Purpose (COICOP) which aggregates the headline index increased during the month under review, with sizable price increases reported in the following major divisions: oil and fats, bread and cereals, meat, coffee, tea and cocoa, vegetables, fish, potatoes, yam and other tubers, and garments and clothing materials and other articles of clothing.

Food Index Pressure Persists

Food inflation increased by 20.28 percent y/y (vs. 19.91 percent in June), with the import component declining for the eighth consecutive month to hit a 17-month low of 14.08 percent.

Meanwhile, m/m rate in this segment, at 1.52 percent (vs. June’s 1.99 percent), continued the moderation it started in June, consistent with the 0.15 percent m/m drop in the average prices reportedly paid by households across various rural and urban markets and informal arrangements, according to the NBS Selected Food Price Watch for July, driven by notable declines in the prices of egg (-3.14 percent), bread (-1.90 percent), chicken (-1.30 percent), gari (-1.15 percent), and rice (-1.10 percent). Year-to-date, the food index has increased by 14.4 percent, compared to 11.6 percent same period last year.

Core Inflation Sustains Slower Rate of Increase

Core inflation increased at a slower pace for the eight consecutive month, rising by 12.20 percent in July, versus 12.50 percent in June, with the highest increases reported in clothing materials and articles of clothing, furniture and furnishing, books and stationary, medical services, glassware, tableware & household utensils, accommodation services and household textiles.

On a m/m basis, prices rose at a slower rate in this segment at 1.00 percent (1.32 percent the previous month), benefitting from reported decreases of 0.3 percent, 2.36 percent, and 6.08 percent in average national prices of premium motor spirit, kerosene, and diesel to N145.9/litre, N280.49/litre, and N197.62/litre respectively.

Food Prices Remain Fundamental to Headline Inflation

Clearly, the direction of headline inflation for the rest of the year will be largely driven by food prices. Save for potential risk of negative surprises, specifically with regards foreign exchange, and the possible increase in electricity tariff, we expect continued moderation in the core component.

Drilling down events vis-à-vis food prices, results being reported in most areas vis-à-vis the dry season harvest are generally favourable.

The raining season has commenced with near-normal timing and cumulative rainfall across most of the country, in line with earlier guidance for the rainy season through September/October for average to above-average cumulative precipitation.

In its latest report, FEWS NET revealed that outside of the northeast, staple harvests that begin as late as October in northern areas are likely to be more robust than last year’s, due to increased access to inputs as well as strong production incentives for farmers due to very high staple food prices, in addition to increased government funding and support. Granted, incidence of flooding has been reported in most parts of the country but not primarily on the back of unusually heavy downpour.

More so, affected areas were largely residential not farmlands.

That said, for the rest of 2017, we maintain our position that except monthly inflation rate stays below the 1.5 percent average recorded since the beginning of the year, the likelihood of the headline index reaching 20 percent by December cannot be ruled out.

To be specific, we forecast the headline inflation rate in 2017 to average 16.10% (bull case) or 17.73 percent (bear case).

Meanwhile, we look for the CPI recording a marginal decline to 16.03 percent y/y and 1.00 percent m/m in August.

Economy

Trump Tariffs: Nigeria Faces Lower FX Earnings, Higher Tariffs on Wheat, Cars

Published

8 hours ago

03/04/2025

Adedapo Adesanya

By Adedapo Adesanya

President Donald Trump on Wednesday imposed reciprocal tariffs on imports from all countries of the world. This has been regarded as the biggest shake-up in the international trading system in decades and has the propensity to significantly affect trade.

According to the US government, there will be a baseline levy of 10 per cent on all imports and far higher tariffs on many key trading partners.

The Trump administration said, “For years, hard working American citizens were forced to sit on the sidelines as other nations got rich and powerful, much of it at our expense.”

Nigeria, a key trade partner of imports and exports, faces 27 per cent in US tariffs and a 14 per cent reciprocal tariff.

Giving a breakdown of how this may impact countries particularly on the continent, African Export and Import Bank (Afreximbank) in a research published on Thursday noted that these tariffs could reduce export revenues, increase production costs, and disrupt investment flows, particularly for nations heavily reliant on US trade.

For Nigeria, it could affect some key exports like crude oil, cocoa, and rubber as well as impact imports like wheat, refined petroleum, and vehicles.

In the fourth quarter of 2024, the US was Nigeria’s fourth top trading partner by import as it carried out 6.4 per cent of its total imports from the US, according to the National Bureau of Statistics (NBS) valued at N1.055 trillion.

As a result of this relationship, this development could lead to challenges such as reduced oil demand which could lower the country’s foreign exchange earnings.

It could also lead to higher tariffs on wheat, which translates to Nigerians facing higher cost of food particularly bread, noodles, and pastries.

Imported vehicles are not exempt, as the cost of buying cars will increase as importers look to cover their profit margins.

“Impact: Reduced oil demand could lower forex earnings, while higher tariffs on wheat and vehicles could raise local prices,” it said in a post published on X (formerly Twitter).

Economy

NASD OTC Bourse Weakens 0.23%

Published

14 hours ago

03/04/2025

Adedapo Adesanya

Nigeria's Unlisted Securities Market Sheds 0.78%, NASD Shares up 8.31%

By Adedapo Adesanya

The NASD Over-the-Counter (OTC) Securities Exchange fell by 0.23 per cent on Wednesday, April 2, after the market resumed from a two-day holiday observed on Monday and Tuesday.

There were three price gainers and three price losers at the first trading session of the new week and month.

FrieslandCampina Wamco Nigeria Plc lost 23 Kobo during the trading day to close at N36.50 per unit compared with last Friday’s N36.73 per share, Geo-Fluids Plc went down by 22 Kobo to sell at N2.48 per share versus N2.70 per share, and Food Concepts Plc slipped by 13 Kobo to end at N1.17 per unit, in contrast to last Friday’s closing price of N1.30 per unit.

On the flip side, Lagos Building Investment Company (LBIC) Plc grew by 23 Kobo yesterday to end at N2.63 per share compared with the preceding day’s N2.40 per share, IPWA Plc appreciated by 5 Kobo to 55 Kobo per unit from N50 Kobo per unit, and Industrial and General Insurance (IGI) Plc marginally increased by 1 Kobo to close at 36 Kobo per share versus 35 Kobo per share.

When trading activities ended for the day, the market capitalisation lost N4.45 billion to settle at N1.910 trillion compared with the preceding session’s N1.915 trillion and the NASD Unlisted Security Index (NSI) shed 7.71 points to 3,308.46 points from 3,316.17 points.

During the session, the volume of securities transacted by investors increased by 625.8 per cent to 9.1 million units from the 1.3 million units, but the value of transactions went down by 17.5 per cent to N7.2 million from N8.8 million, and the number of deals rose by 100 per cent to 22 deals from 11 deals.

Impresit Bakolori Plc remained the most active stock by volume (year-to-date) with 533.9 million units worth N520.9 million, followed by Industrial and General Insurance (IGI) Plc with 70.2 million units sold for N23.8 million, and Geo Fluids Plc with 44.2 million units valued at N89.4 million.

FrieslandCampina Wamco Nigeria Plc, with the sale of 13.7 million units valued at N529.1 million, was the most traded stock by value (year-to-date), trailed by Impresit Bakolori Plc with a turnover of 533.9 million units worth N520.9 million, and Afriland Properties Plc with 17.8 million units sold for N364.2 million.

Economy

The Rising Attraction of Crypto Presales

Published

14 hours ago

03/04/2025

Dipo Olowookere

Crypto presales have become a fundamental pillar within the blockchain fundraising landscape, providing a vantage point to investors for outstanding buying opportunities even before public and secondary markets. Due to these presales, the investor can avail discounted prices for tokens and acquire significant returns on the investment in case the project takes off afterward. For those with an eye on presale crypto, it’s believed that getting to either an illegal or an unreliable presale is pretty hard; thus every avenue must be exploited. Consequently, then, in the world of cryptocurrencies, presale has turned out to be a crucial modality for both developers and investors to somehow pave the way for seeding even better alternatives.

What Do You Mean By Crypto Presale?

Presales are the early fundraising events conducted by blockchain projects that let them sell their native tokens to a limited class of investors before they make an official public offer at retail or before listing on the exchanges. Here, the ones who are privileged to participate are on a whitelisting that mostly consists of very early supporters, venture capitalists, or community representatives. Through participation in a presale, investors get the chance to obtain tokens at lower price points, often including some additional bonuses or incentives. For the projects, presales present their funding opportunity and build a loyal community before going public.

Why Do Crypto Presales Matter to Stakeholders?

It is imperative for a project intending to develop a blockchain project to put on a crypto presale to assist in bridging the gap of capital necessary for the build-up and scaling of the platform; allowing early stakeholders the opportunity to benefit by truly supporting the project in its off-the-ground stages. For the stature investor, the presale is a particular investment opportunity in itself, developing a guarantee that projects of substantial promise might potentially reward high returns. Furthermore, presale tokens are based on either added governance rights, staking returns, or perquisites from the platform in a constrained fashion, vanishing all but one or two.

Participating in Crypto Presales

Becoming a spectator in a crypto presale must be well-earned; the investor must display a satisfactory level of underweight. Firstly, the probable investor should know any right projects-that is, to research the whitepapers, the team, and the roadmap. In many projects, one must be on a whitelist, which generally requires performing small tasks such as tracking social media accounts. Often following retweets, sharing posts, or joining other channels of this community will hide a whitelist. Once he/she is whitelisted, an investor will have to send various cryptocurrencies to the required address (mostly Ethereum or BINANCE) in exchange for presale tokens. It is important to check the legitimacy and be secure while scouting a presale.

Risks Associated with Crypto Presales

Well, crypto presales might offer fantastic opportunities, yet none are without risks. Due to the very little regulation in the crypto space, an investor has very minimal protection when it comes to scam projects. Most of the presale projects are in their very initial stages, which in turn makes it difficult to judge the long-term viability of the project. Moreover, the sphere is so great because the presale tokens can see very abrupt spikes or dips once the project is operational. Scams and marauding projects are no joke, thus it falls most urgently on you to research a bunch of these and stake only what you can afford to lose.

Key Factors to Evaluate in a Crypto Presale

There are a few criteria that shall be essential for making a positive effect on the project. The problem that is supposed to be solved must find proper rationale or should not better still just be significant and observable. This means a useful case here, which will only help to justify its chance of adoption. These experienced engineers and advisors are supposed to make the roles in the success of their projects and are commonly rewarded within the scope of project tokens. Tokenomics comes into the equation when fairly transparent with how tokens are used and distributed. A community that stands with a weak amount of support is not in the best interest, though partnerships and community support are in place to partner the project with success and enhance its reputation.

The Role of Community in Crypto Presales

The credibility of the community is very important for crypto presales. If the community is active and supportive, it can push for mass adoption, create network effects, and increase the value of presale tokens. Many projects actively engage their communities by providing forums for discussion using social media pages, forums, and Telegram groups, thus fostering a sense of ownership and loyalty among early supporters. An active community can be taken as a good indicator by investors, showing genuine interest and support towards the forward motion of the project.

Notable Examples of Successful Crypto Presales

Numerous great crypto presales have been able to change the lives of early investors, turning millionaires overnight. For instance, in 2014, holding its presale, Ethereum went on to make over $18 million, which eventually opened up the road for the subsequently occurring DeFi paradigm. Binance Coin (BNB) is the other excellent token that did a presale before launch and has grown to become one of the leading cryptocurrencies by market capitalization. The above few examples represent what crypto presales are capable of doing in the name of innovation and value for early contributors.

The Future of Crypto Presales

The future of presales will be engineered by the evolution of regulations, technological advances, and market trends. With maturity, one would expect to see relatively standardized administrative processes, in the hope of attracting society’s most unfathomable level of belief in us through due diligence by misaligned objectives in governance and scrutinization processes of the presales. Additionally, with the progression of artificial intelligence and IoT into blockchain integration, it is almost certain that there are other horizons to reach for presales. As the noise of presales dissipates, they may subside into more elaborate, more reliable tools of exploitation in the crypto life.

Spotting Scams in Crypto Presales

The increasing popularity of crypto presales has led to a corresponding increase in scam cases that investors need to guard against. Some triggers are extremely risky: especially those offering returns that seem unreasonable or lack transparency. Some of the worst offenders come with anonymous teams, greatly marked-up whitepapers and careful yet chaotic marketing campaigns. One has to complete thorough due diligence to check for such key things as audits, public opinion, and a proven track record by their team. Platforms that provide information on where to buy presale crypto also add insights and ratings from actual users to help in testing authentic projects.

The Relevance of Regulation in Crypto Presales

The regulation has become a key part of influencing the direction of crypto presales. Countries differ from one another; some nations have given in to pre-sales and accepted them as a way to raise revenue, while others have put forth stringent rules about pre-sales. Regulation can save investors by providing transparency and making people accountable, although it does come at the risk of stifling innovation. The harmony between investor protection and the evolution of innovation would be a key factor, using the increasing age of crypto to propel presales in the years to come. Websites that display information on the regulation of presale platforms, where investors can look up the rules governing it, make it easier for investors to navigate.

In Conclusion

Crypto Presales have become vital to the blockchain ecosystem, giving willing investors early access to potentially worthwhile projects with huge returns. For anyone still wondering where to buy presale crypto, the critical point for them is to engage in deep research and due diligence. While they have their risks, presales bestow their support in favor of breakthroughs while nurturing the possibilities of reaping the healthy fruits upon them. In the long run, presales are destined to play a crucial role in fundraising and innovation, and whoever can put in effort into the dynamic and malleable space will surely find the chance circulating it. Understanding the future of crypto assets in a changing world, hence, requires comprehensive realities on presales, be you an investor, developer, or just an enthusiast of the crypto sector.