2022 started off with hopes of further economic recoveries from the ravages of the coronavirus pandemic. However, barely two months into the year, the global economy took an unexpected turn after Russia invaded Ukraine, fuelling a surge in general price levels, as global food and fuel supplies were dealt a severe blow. As tensions continue to brew in Eastern Europe, it remains unclear the amount and the severity of fresh sanctions that would be imposed on Russia in the coming months, leaving global economic outlook somewhat hazy. 

Although Russia and Ukraine only account for 2.5% of Nigeria’s imports, the implications of the war in the oil market have culminated in harsh cost pressures across the country, with headline inflation racing to a 10-month high in May. While we hold the expectation that inflationary pressures would persist in the second half, we see the possibility of margins remaining stable across the FMCG space, as food manufacturers may continue to pass on rising costs to consumers.