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Why Price Of Food Won’t Drop Immediately Despite Naira Appreciation
As the Nigerian naira experiences an upturn against the dollar, economists have indicated that the positive effects on the country’s commodity prices might not be immediate.
Speaking to Punch, CEO of Economic Associates, Ayo Teriba, highlighted the time lag in the impact of currency fluctuations on market prices.
According to Teriba, while the strengthening naira is a positive sign for the economy, the translation of this development into reduced commodity prices will not be instantaneous.
Consumers may have to wait before seeing a noticeable decrease in the cost of goods and services, as market dynamics and pricing mechanisms gradually adjust to the new exchange rate reality.
He noted, “Foods that have been bought at the old exchange rate will still be tied to the old exchange rate.
“Whether a month or a quarter, it depends on the duration it takes to order and sell. The effect we should hope to see is that the prices have stopped going up. We call it acceleration.”
Echoing similar sentiments, President of Nigerian Economic Society, Adeola Adenikinju, highlighted the economic rationale behind the delay in price adjustments.
Adenikinju stated, “What people have in stock now was purchased at high prices. If they sell at lower prices, they are going to record losses.
“So until they replace the current one, that is when they will reduce their prices.
“But currently, to avoid losses, they will still sell at the rate at which they bought it. We will only start seeing the current prices of things as current stock is sold and new stock is acquired.”
According to Adenikinju, the central bank’s actions in the next few weeks will also reflect what the sellers will do.
He said, “They will be watching the markets to see if CBN will be able to sustain the stability of the naira.”
Nigeria has been battling soaring inflation, which accelerated to 31.70 per cent in February from 29.90 per cent in the previous month, driven primarily by food inflation, which rose to 37.92 per cent.
To tame the pacing inflation, the CBN raised the benchmark interest rate to 22.75 per cent in February from 18.75 per cent and further reviewed it upward to 24.75 per cent on Tuesday.
According to Professor of Economics, Babcock University, Onakoya Adegbei, the fact that prices go up and never come down is not peculiar to Nigeria.
He said, “Reduction in production usually comes with a lag because of rigidity in production.”
He emphasised that market expectations usually drive the delay.
“There is usually a lag and that is due to the expectation theorem. For example, if you expect the price of rice to increase, you will buy more and keep it in the house, So, it will increase your demand. But if you expect that prices will fall, what you already have you cannot dispose of.
“Reduction in production usually comes with a lag because of rigidity in production. If you already produce a certain product at a certain price and the price in the market is falling, you will then wait to see if the reduction will be sustainable. If you see that it is sustainable, then you can make a move to reduce the prices of your product. It is a lag effect,” Adegbei explained.
A foodstuff seller at EFAB market, Favour Uche told the platform, “The price of rice didn’t reduce even now that the dollar is down.”
Uche emphasised the challenges faced by traders, including the expenses incurred to maintain product quality amid infrastructural constraints.
“The price of rice didn’t decrease. Even now that the dollar is down, it still hasn’t reduced. For example, a carton of Titus fish cost N90,000 two weeks ago but today, the same carton of fish is sold at N95,000 as of March 29, 2024.
“Even with the fact that the dollar has reduced, but being in the system, I think I understand why. It is because they use one-third of their profit to buy diesel to cool these fish and keep them frozen. After all, there is no light. So, I understand their pain and why the prices are like that,” she added.
Another trader, Abdul Yusuf, who sells meat, asserted, “Price did not come down even with the dollar fall.
“Two weeks ago the price of one kilogramme of meat was selling at N4,800 but now, it is N5,000. So, the price did not come down even with the dollar falling.”
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Rep Amos reacts as Dutsin-Ma Varsity honours Appropriation chair, Bichi with Doctorate degree
The Chairman, House of Representatives Committee on House Services, Rep. Dan Amos, has joined other well wishers to congratulate Rep. Abubakar Bichi, for bagging Doctorate degree Honoraris Causa, from Federal University, Dutsin-Ma, Katsina State.
Rep. Bichi, the Member representing Bichi Federal Constituency at the House of Representatives and Chairman of the House Committee on Appropriations, was honoured at the weekend for his commitment to the university.
Over the past five years, he has contributed to funding infrastructure projects and providing scholarships for students in his constituency, helping them achieve their academic goals.
In a message of felicitations personally signed Monday morning by Rep. Amos, who currently represents Jema’a/Sanga Federal Constituency of Kaduna State, the Lawmaker ascribed the honorary Doctorate degree to the selfless and dedicated services of Rep. Bichi to his Constituency and promotion of good governance and national development.
“I am thrilled to extend my warmest congratulations to you on receiving an honorary doctorate from the Federal University Dutsin-Ma, Katsina State.
“This prestigious recognition is a well-deserved acknowledgment of your tireless efforts and exemplary leadership in promoting good governance and development in Nigeria.
“Your commitment to your constituents and the nation at large is truly inspiring. Your achievements in infrastructure development, education, and healthcare have made a lasting impact on your community. Your dedication to transparency, youth empowerment and development has positioned your constituency as a model for progress.
“Please accept my heartfelt congratulations on this remarkable achievement. May this honour continue to motivate you to strive for greater heights”, the message read.
Other notable Nigerians honoured at the weekend by the university include, the First Lady of Nigeria, Senator Oluremi Tinubu; President of the Senate, Distinguished Senator Goodwill Akpabio; and former Governor of Sokoto State and Chairman, Senate Committee on Security, Senator Aliyu Wamako.
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Drama as Band A customers request downward review of high tariff
By Francesca Hangeior
Many electricity consumers in the Federal Capital Territory (FCT) on Band A, have appealed to the Federal Government to lower the high tariff amid the economic hardship.
Reports have it that Band A customers are those who enjoy at least 20 hours of electricity daily and are expected to pay N209.5/kilowatts per hour (KWh).
The consumers who live at Lugbe, Area 10, Apo resettlement area, and environs spoke with NAN in Abuja on Sunday.
They said that Band A was okay because they enjoy constant power supply but added that the tariff was too high and so could not cope with the present situation.
Mrs Amen Odigie, a civil servant residing in Lugbe, said that she found herself paying so much to enjoy power supply, which was okay.
Odigie said that what she paid for electricity in the two-bedroom flat she occupied was more than N30,000 in a month.
“This is really telling on me, as what I earn as salary cannot go anywhere with the present economic hardship in the country.
”I want to appeal to the government to review the high electricity tariff as this Band A is taking most of my income, ” she said.
Mr Ugochukwu Okafor, also residing in Lugbe, said that the electricity tariff for Band A customers was too high.
Okafor, a Vulcaniser, said that his income in a month could not pay for the Band A tariff.
According to him, he wants the Federal Government to do something about the Band A tariff, as it is too high, in view of the present hardship in the country.
Mrs Anita Adaje, a fashion designer residing in Apo resettlement, said that she used electricity a lot to run her business, and with this Band A tariff, she was not making any profit.
”When you bill customers so high, they will refuse to pay, and this is really affecting my business.
”My appeal is that government should look into this high tariff and do something about it,” she said.
Mr Festus Ogunbor, a printer in Area 10, said that he recharged more than N30,000 daily to run his printing machines.
Ogunbor said that the high cost of electricity was affecting his business as he could no longer do much work.
”How much do I make that I have to be paying so much for electricity? Please, I want the government to look into this high tariff as it is seriously affecting businesses and cost of living,” he said.
Mr Chidi Okeke, also a printer in Area 10, said that he had been finding it difficult to power his printing machines because of high electricity tariff.
Okeke said that the government should look for a way of reducing the high cost of electricity to boost businesses as well as encourage more Nigerians to go into business.
News
Valencia ask for another Copa del Rey postponement after floods
By Francessca Hangeior
Valencia requested their postponed Copa del Rey first round clash with Parla Escuela be delayed again on Monday because of the devastating flooding in the region.
At least 217 people died, with many more still missing, after an intense storm hit the east of Spain last week.
Valencia’s Copa del Rey game was originally due to be played last week but was pushed back to November 6 by the Spanish football federation (RFEF).
The Spanish club’s La Liga match due to be played last Saturday against champions Real Madrid was also postponed and Los Che asked the club to delay their cup game again.
“The club thinks that, at this time of great difficulty, all energy, attention and support must be focused on helping those affected by the tragic events of (the storm),” said Valencia in a statement.
“Football is in the background. We wish to convey our deepest condolences and our love to the families and friends of the deceased and those affected by this catastrophe that leaves us devastated.”
Several coaches and players from La Liga teams suggested all fixtures should have been postponed at the weekend instead of only Valencia’s match and Villarreal against Rayo Vallecano.
Atletico coach Diego Simeone said it made “no sense” to play matches, while Barcelona’s Hansi Flick said if it was up to him he would have cancelled the whole round of games.
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