.

In the immediately preceding week, prices in the foreign market fluctuated at an increasing rate but ended up on fallen note while domestic prices for LPG relatively stable in the week under review


Key Development in Nigeria's LPG Market
The international prices of LPG fluctuated at an increasing rate throughout the week. but ended at a fallen rate.
Depot prices were not stable throughout the week compared to the previous week.
Despite a somewhat higher price in foreign markets at a fluctuating rate, the shrinking of price gaps between prices at the depot level and those at the international level has remained consistent.
In the week under review, the price increased per kg of LPG and has been within the stable ranges compare to the last few weeks.
Due to transportation costs and proximity to the coast, disparities in LPG retail pricing still exist across the country.

Regional Disparity in Retail
A daily feature of the Nigerian LPG market was regional variance in LPG prices across the country. Because of the increase in the LPG price from the depots the South-West region has the highest price.

Macroeconomics Variables and the LPG Market

Inflation Rate and the LPG: Over the last 13 months, the rate of inflation has been steadily increasing. However it reached its highest point In March 2021 (18.17%), before it started decreases in the last three months. It fell from 17.75% in June to 17.38% in July 2021. (Fig D). From 12.8 in July 2020, to 13.2 in August 2020. The composite food index reduced from 22.95 in March 2021 to 22.72 in April 2021, 20.57 in January 2021, 19.56 in December 2020, 15.48 percent in July 2020 compared to 15.18 percent in June 2020. The anticipated inflation rate for the month of August is 16.80%. The relax of Covid-19 rule might contribute to the change in the rate of inflation trend.

Exchange Rate and the LPG: The exchange rate experienced some decreases from N410.16/$1 to 410.26/$1 at the end of the week due to the continued growth of inequalities in the parallel market. The exchange rate is one of the factors that influences LPG prices on the international market. A higher exchange rate would boost the price of LPG on the local market by a considerable amount. This means that the LPG market is in a state of flux, Figure E.

Crude oil Price and the LPG: The relationship between LPG price and crude oil price remains positive, as a by-product of crude oil. There was a drop in the Crude oil prices towards the end of the week after initial rises in the beginning but somewhat showed a level of appreciation at the end the week. (Figure F). This shows that the price of crude oil has not been stable in the international market. This reflects variability in the market price for LPG.

Foreign Reserves: As in the previous week, the Nigerian Gross Foreign Reserve dropped slightly from $33.49 billion to $33.48 billion despite increases in the price of oil and rise of the exchange rate from 410.16/$1 to 410.26/$1. Decrease in the external reserve is due to the CBN policy on measure to stabilize naira rate against dollar.

PMI: The CBN Purchasing Managers Index (PMI) recorded overall growth in employment, business and inventory in the month of December while ordering in the category of supply for power, gas, steam and air conditioning remained stagnant while business operation & inventory were static in the same month at 45.7 per cent.

Current Topical Issues of the Week
Covid-19: Covid-19 causes demand for goods and services to fall due to the full or partial lock-down effect. The implication of the Covid-19 contracts to the LPG market

Policy Recommendations
Reducing the effect of the Covid-19, entails more campaign and public awareness of the virus as people are easily carried away and relaxing. Vaccines for Covid-19 should be distributed without much delay if available.

Outlook: Coming Weeks
The prices in the weeks to come may rise due to the effect of increase in the LPG price level from depot even though the rate of inlation has been slightly reduced in the past few months.



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