Prices have shown a slight rise in the international and domestic markets for LPG in the immediately preceding week
Regional disparity in the prices of LPG across the country has been a regular feature of the Nigerian LPG market. Though the South-south geopolitical zone hosts the great majority of depots in the country due to its proximity to the ocean, prices have been highest in the region.
The exchange value of the naira to the US. $ has remained stable at N380 to US.$1 throughout the week (Figure D). This is happening in the midst of severe shortage of the US. dollar.
Inflation is continuing its rise consistently for more than 6 months. The latest report from the Nigeria Bureau of Statistics(NBS) shows that the headline inflation rate settled at a 27-month high of 12.82% y/y for the month of July, 26bps up from 12.56% y/y in June. The combined rise in LPG prices in the international market and the recent inflationary trend might mean higher overall prices in the weeks and months to come.
The NBS also reports that there is a 6.10% decline y/y in real GDP growth for the 2020 Q2 GDP. Much of the decline would have come from the COVID-19 pandemic-induced lockdown.
Prices of crude oil in the international market in the week under review showed a general upward trend, though a decline had commenced from mid-week(Figure E).
The easing off of the oversupply situation in the international market for Natural gas will likely continue to rase prices in the weeks to come.
The twin effect of a drop in over-supply and the recent jump in the value of the US. dollar after the meeting of the Fed. might signal a further rise in LPG prices internationally.