Nigeria, the United States of America and the United Kingdom are expected to publish their consumer price index reports this week. Prices have begun to cool in most economies, but Nigeria’s still remains high.
Meanwhile, the Organisation of Petroleum Exporting Countries (OPEC) will reveal Nigeria’s oil output for July today.
“Prices have begun to cool in most economies, but Nigeria’s still remains high.”
Monday, August 12
OPEC to release July oil market report
The Organisation of Petroleum Exporting Countries (OPEC) will be releasing its oil market report for the month of July on Monday.
Nigeria’s average daily crude oil production rose marginally to 1.276 million barrels per day (bpd) in June, according to OPEC.
This is according to data from direct communication with Nigerian authorities, which marks a rise of just 25,000 barrels per day from the 1.251 million barrels per day recorded in May.
Meanwhile, the secondary sources placed Nigeria’s daily average crude oil production in June at 1.362 million barrels per day, a decrease of 10 thousand barrels compared to May’s figure of 1.372 million bpd.
Despite the decline in production according to secondary sources, Nigeria maintained its status as Africa’s largest oil producer, followed closely by Libya, which produced 1.2 million bpd in June.
The average crude oil production of 1.27 million barrels per day in June indicates that for the first half of 2024, Nigeria has consistently fallen short of its OPEC production quota of 1.5 million barrels per day and its budget target of 1.78 million barrels per day.
Read also: OPEC predicts Dangote Refinery will pressure Europe’s oil industry
Wednesday, August 14
US to release inflation report for July
The US Bureau of Labour Statistics will be releasing the US inflation report for July on Wednesday.
In June, the US inflation hit 3 percent, a 0.1 percent decline from May, making it around its lowest level in more than three years.
The US Consumer Price Index, a broad measure of costs for goods and services, which saw a 3.8 percent slide in gasoline prices, held back inflation for the month, offsetting 0.2 percent increases in both food prices and shelter.
Excluding volatile food and energy costs, the so-called core CPI increased 0.1 percent monthly and 3.3 percent from a year ago. The annual increase for the core rate was the smallest since April 2021.
UK awaits July’s inflation rate
The Office for National Statistics (ONS) will be releasing the United Kingdom’s consumer price index on Wednesday.
Prices in the UK rose by 2 percent in the year to June 2024, unchanged from May, which was the lowest figure for almost three years.
The Bank of England has a target to keep inflation at 2 percent. While inflation was well above that, the Bank put interest rates up to 5.25 percent in a bid to slow price rises.
At its last meeting, the monetary authorities decided to cut rates to 5 percent as inflationary pressure eases.
According to the ONS, the rise in inflation was partly driven by a sharp increase in hotel prices. The costs of package holidays, cinemas, theatres, and concerts also rose.
Clothing and footwear prices fell, while food and drink inflation has also dropped back sharply from the highs of recent years.
Inflation has fallen significantly since it hit 11.1 percent in October 2022, which was the highest rate for 40 years.
Investors are betting that inflation will tumble further through the spring months, reflecting the sharp decline in the price of natural gas since last year and a slowdown in food price rises.
The CPI measures price change from the perspective of the consumer. It is the official target for price stability by the Bank of England.
Read also: Naira weakness, inflation dampen cement makers’ earnings
Thursday, August 15
NBS to release Nigeria’s inflation rate
The National Bureau of Statistics will be releasing Nigeria’s July inflation figures on Thursday.
Nigeria’s annual inflation rate ticked up as expected to 34.19 percent in June due to rising food prices, making it the fourth highest inflation rate ever since 1996.
The turnaround from three consecutive broad-based declines in March, April, and May month-on-month headline figures to an increase of 0.17 percent in June 2024 negates many analysts’ projections.
The pressure on June’s figure was broad-based as the food and core inflation baskets increased by 21 basis points and 36 basis points to 40.87 percent and 27.40 percent, respectively.
Inflation has continued to gallop due to high energy costs, the impact of exchange rate fluctuations, and persistent insecurity concerns in the agricultural producing states in the country.
To fight inflation, the monetary policy committee (MPC), led by Olayemi Cardoso, the governor of the central bank, had hiked the country’s benchmark interest rate by a combined 800 basis points to 26.75 percent.
Analysts are betting that inflation will begin to moderate in July, buoyed by base effects and a bumper harvest later this year.
“The government’s plan to import 250,000 metric tonnes (MT) of wheat and 250,000 MT of maize also bodes well for the food price outlook, providing a positive counterbalance to the inflationary risks,” they said.
“Overall, we expect headline inflation to moderate by 50 basis points to 33.7 percent,” CardinalStone analysts said.
Olaolu Boboye, lead economist at CardinalStone Research, said the base effect of inflation suggests that inflation peaked in June and will cool inflation in July.
“Inflation in July will see three major pressure points, which are a hike in fuel price pressure due to scarcity, exchange rate pressure, and sustained food pressures, but it won’t be enough to max out the benefit from the base effect,” Boboye said.
Naira hits convergence as CBN’s rare $876 auction boost liquidity
The naira has continued to rally, hitting a near convergence at the official and parallel market following the sale of $876 million through the retail Dutch auction system.
After trading last Thursday, the naira gained 0.18 percent as the dollar was quoted at N1,593.62 compared to N1,596.52 quoted on Wednesday at the Nigerian Autonomous Foreign Exchange Market (NAFEM), according to the data from the FMDQ Securities Exchange Limited.
On the parallel market, popularly called the black market, the naira gained further on Thursday as the dollar crashed to N1,595. This represents a 0.94 percent (N15) gain over N1,610 quoted in the morning trading on the black market.
In the latest testament to the CBN’s ongoing commitment to support the proper functioning of the foreign exchange market by enhancing liquidity when necessary, the apex bank offered $876 million to fulfil bids submitted by customers at an auction concluded on Wednesday, August 7, 2024.
In line with its pledge to provide transparent access to foreign exchange for all legitimate customers, the CBN’s leadership has introduced an additional mechanism through the Retail Dutch Auction System (RDAS) to facilitate FX sales to end users directly.
The naira has come under pressure through seasonal demand from summer tourism as well as businesses seeking the greenback to bring in goods in the import-dependent nation.
