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The Pentad – Urban Retail Price Tracker August 2017

• Price increases have been the dominant means of combating elevated cost-inflation for most Nigerian companies in 2017, with most of the discuss in the sphere related to potential or actual pass-through to earnings. In this maiden edition of “The Pentad – Urban Retail Price Tracker”, we re-direct the discus to the retail side of things—which is of greater relevance to the average Nigerian, with a view to isolating weekly price and volume dynamics across five of our coverage sectors: breweries, cement, consumer goods, commodities, and oil and gas. Ultimately, we also look to guestimate the impact of inflation and CBN’s FX policies on the average Lagos (Urban) consumer.

Key summary of outcomes

• Survey result shows that the strongest retail price pressure across coverage occurred in April (+1.3%).
• On a Week-on-Week (WoW) basis, retail price pressure was more evident in the second week of May.
• After the surge in prices in the second week of May, we noticed sizable price moderations thereafter, with the Pentad Urban Retail Price (PURP) index indicating some spikes and then a 4% decline in coverage retail prices over July.
• For us, notable retail price retrace may be underpinned by some delayed pass-through from increasing FX availability in the broader economy. 
• Going by the index readings, urban retail prices rose 1.1% over June (vs. +1.5% MoM urban inflation reported by NBS).
• Retail price volatility, as measured by standard deviation from the mean, was greater in the commodities market.
• The consumer space saw the least price volatility in the review period.
• Despite the ubiquitous increase in prices across the segments, volumes were largely flat to increasing across board.