The Managing Director of Financial Derivatives Company Limited, Bismark Rewane, says with the commencement of diesel production at the Dangote Refinery, the price of diesel per litre will fall below N1,000 from the current price of N1,500. Rewane was a guest on Channels Television’s News At 10 during the week where he reviewed the recent hike in interest rates by the Central Bank of Nigeria (CBN).
Diesel is a major stocking factor.
Well, on the retail side, it’s N1,500. Dangote refinery has already started putting diesel in the market and people are buying that. If it stays at N1100 and continues to go in that direction, this will help to bring down inflation significantly.
The bakers for one because they are funding their furnaces and their ovens with diesel, you are gonna see that improve. So for cement manufacturers and bakers, this is good news.
Now, narrow weakness talking inflation. This is where when the exchange rate went all the way up, it led to inflation coming down. Now, that the inflation exchange rate is appreciating, it will come down. But you see in the economic state prices are sticky downwards. So we are going to see and appreciate a reduction in prices but much slower than when the prices went through the roof. That pass-through contributes 50% to headline inflation. N1,950 to $1 in February. After the February MPC meeting, it came down to 1,600 naira per dollar today. It’s 1,320 it could be heading towards 1,250 very soon.
