While the Debt Management Office auctions off N150 billion in FGN bonds, the Central Bank of Nigeria’s monetary policy committee is scheduled to convene on Monday and Tuesday for a much-awaited discussion that may result in the first time that benchmark interest rates are held stable following four consecutive hikes.
“However, despite a monthly slowdown, food inflation remains higher than the 29.34 percent recorded in August of last year.”
DMO to sell FGN bonds for N150 billion
Three FGN bonds totaling N150 billion will be issued today by the Debt Management Office.
A five-year bond worth N70 billion would be reopened together with bonds with maturities of seven and nine years, priced at N50 billion and N30 billion, respectively.
DMO sold N374.75 billion of the three bonds that were offered at the latest auction in August, with the longest-duration bond having a stop rate of 20.45 percent.
In the August FGN bond auction on Monday, it sold five times its offer on the longest tenure (reopened nine-year bond).
The N190 billion FGN bonds, which were offered in three tranches on Monday, are the lowest-value auctions this year; they were offered last month for N3 billion.
The smaller offer size, according to analysts, suggested that government borrowing may be cut.
According to information from the Debt Management Office (DMO), Nigeria’s overall debt stock increased in the first quarter (H1) of 2023 to N121.67 trillion from N97.34 trillion as of December 2023.
NBS to reveal some food prices
On Monday, the National Bureau of Statistics is anticipated to disclose a subset of food prices for the month of August.
August saw the second consecutive month of decline in food inflation in over two years, with the rate dropping from 39.53 percent in July to 37.52 percent in August. Food inflation is a major driver of overall inflation.
However, despite a month-over-month slowdown, food inflation is higher than the 29.34 percent reported in August of last year.
The statistics office claims that price hikes for bread, maize, grains, cereals, cassava tubers, yams, palm oil, vegetable oil, etc. are to blame for the rise in food inflation year over year.
According to the NBS data, “the food inflation rate in August 2024 was 2.37 percent on a month-over-month basis, which shows a 0.10 percent decrease compared to the rate recorded in July 2024 (2.47%)”.
Nonetheless, it ascribed the monthly decrease to a slowdown in the average price increases of groundnut oil, tobacco, tea, milk, yam, and other products.
Transport price monitor
On Monday, the National Bureau of Statistics will disclose the average fare that commuters spent for bus rides, okada drops, and air travel in August.
The average fare that commuters paid for citywide bus trips dropped to N942.61 in July 2024 from N963.58 in June 2024, a fall of 2.18 percent, according to the bureau. In the meantime, it fell from N1,336.29 in July 2023 by 29.46 percent on an annual basis.
In addition, commuters paid an average fare of N7,117.17 for intercity bus journeys in July 2024, which is a 0.35 percent monthly increase from N7,092.03 in June 2024. On a year-over-year basis, however, the fare increased by 20.23 percent from N5,919.49 in July 2023.
In July 2024, the average fare paid by passengers for a single voyage on designated routes by air was N98,561.74, which represents a 9.65% rise over the previous month (June 2024). The fare increased by 25.12% year over year from N78,775.74 in July 2023.
In July of 2024, the average transport fare paid on Okada transportation was N483.33, indicating a 1.22 percent rise from the amount recorded in June of that same year (N477.49). When compared to July 2023 (N646.12), the fare reduced by 25.20 percent on an annual basis.
Due to the increase in gas prices, transportation fees have more than doubled, potentially raising the cost of transportation from August to the present.
NBS to issue a report on foreign commodities and data
Nigeria’s foreign goods and statistics report for the third quarter (Q3) is anticipated to be released by the National Bureau of Statistics on Tuesday.
The largest country in Africa saw a decrease in merchandise trade of 3.76 percent from the previous quarter to N31.8 trillion in Q2, but an increase of 150.39 percent from the previous year.
This is in addition to the nation’s N6.95 trillion trade surplus. This brings the overall value to N12.14 trillion in the first half of 2024, a 33.63 percent rise from the N5.19 trillion recorded between January and March 2024.
Crude oil accounted for 74.98 percent of all exports in Q2 with a value of N14.5 trillion, while non-crude oil exports increased to N4.8 trillion, or 25.02 percent of total exports, with non-oil products contributing N1.9 trillion, or 10.01 percent, of total exports.
However, the value of imports, which totaled N12.4 trillion in Q2, increased by 97.93 percent over the value recorded in the same quarter of 2023 (N6,301.95 trillion), despite the share of overall imports declining by 10.71 percent.
In terms of import trading partners, China came in first, followed by the United States of America, Belgium, India, and the Netherlands.
In terms of exports, Spain, the US, France, India, and the Netherlands were Nigeria’s biggest trading partners.
MPC to convene in anticipation of an interest rate pause
The monetary policy committee of the Central Bank of Nigeria will convene on Monday and Tuesday, September 23–24, 2024, to decide on a rate that may halt the increase in interest rates.
The conclusion of these crucial policy discussions will be eagerly awaited by market participants, companies, and consumers, particularly as inflation has started to decline.
Analysts had predicted that in order to boost economic activity, the committee may think about lowering rates. Analysts noted that the MPC is now faced with a fresh dilemma as a result of the recent increases in gas prices.
“First off, at 32.15 percent, the inflation rate is still quite high. It might be too soon to shift the monetary policy position. Two, there is a strong likelihood that inflation will reverse the trend and begin to rise in September 2024 as petrol pump prices across the country are adjusted,” according to a financial analyst.
The MPC committee raised the policy rate by 50 basis points to 26.75 percent during its 296th meeting in July. Furthermore, while maintaining all other parameters constant, the MPC adjusted the asymmetric corridor surrounding the Monetary Policy Rate (MPR) from +100/-300 basis points to +500/-100 basis points.
