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Why Indomie slashed prices amid rising inflation

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Indomie Instant Noodles, a Dufil Prima Foods Limited brand, says it has reduced its price to keep the product affordable to Nigerians.

BusinessDay survey of some stores across Lagos shows that the price of 70g Indomie Regular Chicken noodles dropped to N250 from N300 last month. While it’s 40-pack carton of Indomie fell to N10,000 from N12,000.

Before Indomie reduced its price, it was higher than other brands like Mimee (N200) and Honeywell noodles (N250).

“It was because of the operational cost that we brought the price down,” Temitope Ashiwaju, the company’s group corporate communications & event manager told BusinessDay. “The operational cost went down in our favour, and we believe it is the responsibile thing to do to pass on the benefit to our customers. That was why the price was reduced.”

Ashiwaju pointed out that the company has been in Nigeria for a very long time and the brand understands it’s consumers, so it is taking the lead in price reduction to set example for others.

“We are never going to be taking advantage of the populace. We want to make profit, but in a fair way,” the spokesman added. “That is why we are determined to keep our products affordable to Nigerians.”

Asiwaju’s statement countered opinions that the price reduction was due to low patronage.

Dufil Prima’s move has been described as one that will lead other brands to also reduce their prices because “Indomie is the price setter in the noodles market,” a retail experts said.

Over the past nine months, the inflation rate in Africa’s biggest economy has accelerated to the highest largely on the back of the federal government reforms including the removal of petrol subsidy and naira devaluation.

Nigeria’s headline inflation rate rose for the 14th consecutive time in February to 31.70 percent from 29.90 percent in the previous month, according to the National Bureau of Statistics.

Food inflation, which constitutes 50 percent of the inflation rate, rose to 37.91 percent from 35.41 percent. And it is on course to hit an all-time high this month due to a combination of rising demand, higher transportation costs and worsening insecurity.

The World Bank’s latest Nigeria Development Update report revealed that rising inflation and sluggish growth in Africa’s most populous nation increased the number of poor people to 104 million in 2023 from 89.8 million at the start of the year.

This means that from January to November, an additional 14.2 million people fell into poverty

A recent report by Euromonitor International, a global market research provider, shows that the sales value of noodles in the country’s formal market rose year-on-year by 38.2 percent to N427.2 billion in 2023, the highest in at least six years.

Pasta sales rose by 26.1 percent to N404.0 billion, while that of rice rose by 14.4 percent to N494.0 billion.

The sales volume for noodles increased to 266,600 tonnes from 263,700 tonnes. Pasta sales volume dropped to 384,700 tonnes from 396,600 tonnes, while 520,400 tonnes of rice were sold as against 547,400 tonnes in 2022.

“Noodles was the only subcategory within rice, pasta and noodles to see growth in 2023, though this was marginal. While all staple foods struggled throughout the year, small pack sizes and minimal preparation time (three to five minutes) make noodles an affordable option in challenging times,” the report said.

It said noodles had become increasingly popular in food service due to convenience and low prices. “Indeed, in April, the leading noodles player Dufil Prima Foods Plc opened its eighth mono-brand foodservice outlet, Indomie Café, with plans to open more outlets in the future.”

A breakdown of the data shows that plain noodles recorded the same sales of N0.9 billion in 2023 and 2022. But instant noodles rose from N308.3 billion to N426.3 billion.

Analysts at SBM Intelligence said in a recent report that despite cost-cutting and inflation management measures, Nigerian households spent 97 percent of everything they earned solely on food.

“The Tinubu administration has its work cut out – arresting spiralling insecurity, tackling grinding poverty, enhancing economic opportunity and forging a sense of national consciousness. It is safe to say that it is not off to a great start,” they said.

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Nigeria projected among top-five world’s biggest economies

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Nigeria has been projected to be among the top five biggest economies in the world by 2075.

The Spectator Index disclosed in a post on Friday, quoting a Goldman Sachs’ document titled ‘The Path to 2075—Slower global growth, but convergence remains intact’.

According to the news platform, Nigeria’s economy is estimated to reach $13.1 trillion by 2075.

The report showed that Nigeria followed China ($57 trillion), India ($52.5 trillion), the United States of America ($51.5 trillion), and Indonesia ($13.7 trillion) in projected world’s biggest economies by 2075.

Data from the National Bureau of Statistics showed that Nigeria’s Gross Domestic Product grew by 3.84 percent in the fourth quarter of 2024. The country’s GDP is estimated to be $568 billion at the end of 2024 in real GDP terms.

Africa’s most populous nation is expected to reach a GDP estimate that could be $585.9 billion.

The development comes as the President Bola Tinubu administration projects a $1 trillion economy by 2030.

Meanwhile, financial analysts had expressed doubts over the possibility of Nigeria achieving a $1 trillion economy by 2030 when the country’s projected GDP growth rate is 3.2 percent.

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Dangote Sugar, Oando, other stocks push NGX to N1.185tn gains

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Oando, Dangote Sugar and other stocks have propelled Nigerian Exchange Limited, known as the Nigerian Stock Market, to a significant N1.185 trillion single-day gain.

Accordingly, NGX market capitalisation increased by 1.57 percent to reach N76.761 trillion, up from N75.576 trillion recorded on Tuesday.

Similarly, the All-Share Index (ASI) rose by 1,466.87 points, or 1.22 percent, settling at 121,257.69 from its previous close of 119,790.82.

Other stocks that fueled the bullish run on Wednesday are Cileasing, Champion Breweries, and 59 other stocks.

Consequently, Ekwutosblog reports that market breadth closed positive, with 63 gainers and 17 losers.

On the gainers’ table, Dangote Sugar rose by 10 percent, closing at N48.40, while Oando Plc also increased by 10 percent, settling at N68.75 per share. Then, Cileasing grew by 9.98 percent, finishing at N5.18, and Champion Breweries soared by 9.98 percent, ending the session at N10.91 per share.

 

Also, Computer Warehouse Group gained by 9.95 percent, closing at N11.60 per share.

Meanwhile, conversely, University Press dropped by 6.25 percent, finishing at N6.00, while RT Briscoe fell by 6.12 percent, closing at N2.30 per share.

Multiverse Mining declined by 4.89 percent, settling at N8.75, and Meyer shed 4.69 percent, ending the session at N9.15 per share.

In another level of analysis, a total of 861.67 million shares worth N26.18 billion were exchanged across 22,896 transactions.

This is compared to 868.68 million shares worth N23.71 billion that were traded across 22,207 transactions earlier.

Market data showed that transactions in the shares of Fidelity Bank topped the activity chart with 82.98 million shares worth N1.66 billion. Accordingly, Caverton Offshore Support Group followed with 64.18 million shares valued at N319.69 million, while Zenith Bank transacted 60.62 million shares worth N3.45 billion.

Also, Ja Paul Gold traded 56.26 million shares valued at N115.35 million, and Access Corporation sold 48.59 million shares worth N1.12 billion.

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Naira continues depreciation against dollar at official forex market

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The naira continued depreciation against the dollar at the official foreign exchange market on Wednesday.

The Central Bank of Nigeria exchange rate data on Wednesday showed that the Naira weakened slightly to N1,549.26 on Wednesday from N1,549.04.

This means that the Naira marginally dropped by N0.22 against the dollar on Wednesday.

Ekwutosblog reports that this is the third time Naira has recorded depreciation against the dollar this week.

Meanwhile, at the Naira black market, the Naira gained N5 on Wednesday to close at N1,590 per dollar, up from N1,595 the previous day.

This showed that the naira ended Wednesday with sentiments at both foreign exchange markets.

 

Recall that on Monday and Tuesday this week, the Naira depreciated at the official market but has remained relatively stable at the black market.

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