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Oil prices slip on looming rate hike concerns 

Central banks worldwide have begun another round of rate hikes. Last month, the BOE raised its policy rate to 5%, and just yesterday, Ghana’s central bank hiked its benchmark policy rate by 50bps to 30%p.a. Nigeria is widely expected to follow suit ahead of its MPC meeting today. Additionally, the ECB and Fed are anticipated to raise rates again this week, with traders speculating a 25bps increase in Fed rates at the conclusion of the ongoing FOMC meeting.

This has led to higher volatility and tentativeness in the global commodities market, with Brent falling by 0.24% to $82.54pb today after experiencing a three-day gain to $82.74pb on July 24. Nevertheless, oil prices remain supported by tight supply in the market and growing optimism for China’s Q3’23 growth. Currently, Brent price sits 2.59% higher than its closing price at the end of the previous week ($80.46pb) and is near a three-month high of $83.02pb.

Rising input costs to bolster the price of noodles

The price of a carton of noodles has risen by 10.25% in a year to ₦4,300 due to increases in the price of major inputs like wheat flour and palm oil. Year-on-year, the price of a 25-litre bottle of palm oil has surged by 87.5% to ₦37,500 and that of wheat flour by 18.87% to ₦31,500/bag, owing to the disruptions from the Russia-Ukraine war. In the coming weeks, we expect the prices of these commodities to remain elevated due to the termination of the Black Sea grain deal and the planting season effect. Nigeria is still the 11th largest consumer of noodles globally, and rising prices could threaten this strong demand in the coming months.

These and other burning economic issues were discussed on the Business Morning programme on Channels TV by FDC’s senior analyst, Dr. Adesola Sunmomi.

Click the link to watch the video.

Enjoy your read!