08 November 2018 : Analyst's Urban Retail Price Tracker – the PURP index – recorded a mixed interplay of prices, ultimately resulting to a modest increase of 0.61% MoM to 110.2 pts in the month of October (vs 1.01% MoM in September). Higher prices in the month were evident across the brewery, commodity and oil & gas baskets. On other fronts, prices in the consumer and cement sectors were lower in the month.

In the consumer basket, average prices moderated by 3.3% MoM erasing last month’s price increase of 3.2%. The decline is reflective of lower prices of Golden Morn (-13.8%), Maggi (- 6.1%), Lipton (-6.5%) and Knorr (-2.9%). However, the prices of pasta and noodles remained stable in the review period.

The commodities basket increased 0.85% MoM in October for the eight-consecutive month. Similar with the previous month, price increase under this basket largely reflected a jump in prices of rice (+2.25% MoM) on the back of tensed restriction on importation of foreign rice and impact of flood in rice-producing areas. Elsewhere, prices of palm oil and vegetable oil stayed flat over the period. Feedback from the market revealed most retailers are waiting till the last weeks of the year before offloading their palm oil stocks to the market.

Weightings Price change (MoM) Standard deviation of prices Broad sales volume direction

The brewery basket sustained expansion into the second month, expanding 0.83% MoM. The increase was more evident in prices of Satzenbrau (3.60% 

MoM) and Star (1.59% MoM).

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.

Prices in the oil & gas sector witnessed an increase over October with average prices up by 1.10% MoM largely due to higher prices of cooking gas (+3.4%). Elsewhere, lubricant prices were flat over the period.

Lastly, prices maintained its downtrend in the cement sector for the month of October with prices down by 3.6% MoM. On volumes, retailers noted flat sales volume on the back of higher rainfall in the month.

Reporting for EasyKobo on Thursday , 08 November 2018 in Lagos, Nigeria

Source: ARM Securities Limited

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