06 July 2018 ( Lagos ) : ARM Securities Limited’s Urban Retail Price Tracker—the PURP index— logged an increase of 0.81% MoM to 105.7 pts in the month of June (vs 0.77% MoM in May). Despite declines in the consumer, brewery and cement space, price increases across the commodity and oil & gas basket, on the back of higher crude oil price and the Ramadan festival largely neutered the decline to cause an overall increase in average retail price. Across board, volumes were generally higher.

To determine how retail prices have moved on average, analysts fashioned out a Pentad Urban Retail Price Index (PURP) which adopts April 1st to April 8th as a base period. The PURP index accords 30% weightings apiece to consumer and commodities prices, 20% weighting to the brewery basket with a further 20% distributed evenly between cement and cooking gas prices.

Across the sectors, price evolution is monitored on a weekly basis while analysts adopt 0.6%, 0.0%, and -0.6% as indicators for volume expansion from prior week, no change in volumes, and week on week output contraction (respectively) in a manner slightly akin to CBN’s PMI methodology.

Average prices in the brewery sector declined by 0.08% MoM after three consecutive months of price increases. Notably, the price change reflected the intense competition for market share even as Tiger beer, Castle Lite and Budweiser began to gain momentum. Star (-0.77%) and Gulder (-0.77%) witnessed the largest price decline. On volumes, feedback from retailers revealed an increase in volumes during the month.

The commodities basket increased 1.06% MoM in June. Like previous months, palm oil -1.67% price was down reflecting increased supply of the commodity. Elsewhere, both vegetable oil and rice witnessed price increases of 1.62% MoM and 2.24% MoM respectively. Feedback from retailers linked the general increase in price of both vegetable oil and rice to the Ramadan festival which made it possible for retailers to raise prices.

Retailers extended price discounts on products in the consumer sector on the back of the Ramadan festival. Overall prices declined 2.95% MoM. Amongst the products that witnessed decline in prices include Golden Penny pasta (-17.4%), Milo (- 15.5%) and Honeywell pasta (-11.4%). Volumes were higher across board.

Prices in the oil & gas sector expanded 1.36% MoM with price of lubricants (+0.24%) and cooking gas (+4.0%) both tracking higher. Higher price across both products reflects higher crude oil price.

The cement sector saw price declines (-1.3% MoM) in the month of June. On volumes, retailers noted lower sales volume on the back of higher rainfall in the month.

Reporting for EasyKobo on Friday, 6 July 2018 in Lagos, Nigeria

Source: ARM Securities Limited

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