NGX | Consumer Goods Sector Mid-Year Outlook - A tale of currency woes and inflationary fears
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The negative impacts of a weaker currency and stubbornly-high inflation will likely worsen in the second half of 2023. The naira devaluation at the I&E window that trailed the monetary policy reforms could drive the costs of imported raw materials higher and stoke material foreign exchange losses. In addition, even though most consumers are insulated from the impact of the depreciation at the I&E (as they mostly access FX at the parallel market), the combined impact of subsidy removal and the potential increase in electricity tariffs suggests that discretionary income could become weaker. Notwithstanding, the ongoing moderation in select commodity prices and companies' strategic responses could act as offsets