Ogasabi on 9am news Nigeria reports that Nigeria’s inflation rate has moderated to 33.40% in July 2024, according to the latest data from the National Bureau of Statistics (NBS). This marks a slight decrease from the 34.19% recorded in June 2024. Food inflation rate also saw a significant drop, decreasing by 12.55 percentage points Year-on-Year (Y-o-Y) to 39.53% in July 2024, down from 26.98% in July 2023. However, core inflation rate, which excludes volatile food and energy prices, rose from 20.47% in July 2023 to 27.47% in July 2024, indicating persistent upward pressure on the general price level.
While the reduction in July’s inflation figure suggests a possible peak, the outlook remains cautious. The impact of recent policies aimed at boosting food production, imports, and harvest season effects may continue to drive down headline inflation. However, risks such as foreign exchange depreciation and ongoing insecurity could dampen these positive trends.
Nigeria’s PMI Below 50 Threshold in Over One Year
In other economic news, Nigeria’s Purchasing Managers Index (PMI) continues to show signs of stress in the business and manufacturing sectors. The PMI stood at 49.7 in July 2024, slightly up from 48.8 in June 2024, but still below the 50-point threshold, indicating a contraction in economic activity. This marks over a year of the PMI remaining under 50, reflecting the tight macroeconomic conditions and uncertainty in the Nigerian business environment.
Nigeria Aims to Raise About $500mn Through Dollar-Denominated Bonds
In the financial markets, the Federal Government of Nigeria (FGN) has announced plans to raise approximately $500 million through a dollar-denominated bond from both local and international investors. The bond, set to be offered on August 19, 2024, will be a 5-year instrument with bi-annual interest payments in the currency of issuance. While this move could increase dollar liquidity in Nigeria’s foreign exchange market, macroeconomic uncertainties may pose challenges to investor confidence.
Global Commodities
Meanwhile, in the global commodity market, most commodities ended the week on a bullish note, with gold and silver gaining over 2% due to their status as safe-haven assets during times of uncertainty. Brent crude also saw a 3.62% increase, although West Texas Intermediate (WTI) crude futures slipped by 3.62% amid concerns over escalating geopolitical tensions in the Middle East.
Local Commodities
In the local commodity market, AFEX commodities mostly ended the week bearish, except for sorghum, which gained 3.80% to close at N820.00. Other commodities like maize, cashew, and soybeans experienced declines of -3.75%, -3.61%, and -6.67%, respectively.
In the currency market, the Nigerian Naira appreciated for the second consecutive week, gaining 62 basis points (bps) week-on-week to close at N1564.48/US$. The money market saw a slight easing in system liquidity, leading to a decrease in interbank rates, with the Open Repo Rate (OPR) and the Overnight rate (O/N) falling by 285bps and 221bps week-on-week, respectively.
Nigerian Treasury Bill
In the fixed income market, Nigerian Treasury Bills experienced increased demand, resulting in a 200bps week-on-week decline in the average benchmark yield to 25.46%. However, the OMO Bill market retained a sell sentiment, with the average benchmark yield rising by 374bps to 26.05%. The unexpected moderation in July’s inflation figures boosted demand in the local bond market, leading to a 205bps drop in the average benchmark yield to 19.32%.
Finally, the Nigerian equities market saw a downturn this week, with the All-Share Index (ASI) dipping by -1.51% to close at 97,100.31 points. Investors lost N846.53 billion in market capitalization as sell-offs and profit-taking activities dominated the trading sessions.
Stay tuned to 9am news Nigeria for more updates on these stories and other breaking news. Ogasabi on 9am news will continue to bring you the latest developments from the Nigerian economy and beyond.
