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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.”
By Kayode Sanni-Arewa
The leader of the opposition Labour Party and the 2023 Presidential flag bearer, Peter Obi, has admonished the newly elected leadership of Ohanaeze Ndigbo Worldwide led by Senator John Azuta Mbata to work towards peace and unity of the nation.
Writing on his X handle in a congratulatory message to the Executive, Obi urged the new Executive to leverage their position, which shows the people’s confidence in them to strengthen the Igbo family and unite the country.
“On behalf of my family and the Obedient movement, I congratulate the Newly Elected President General of Ohanaeze Ndigbo, Senator John Azuta-Mbata; the Deputy President General, Prince Okey Nwadinobi; the Secretary-General, Emeka Sibeudu, and other newly elected executive members, on their emergence as the leaders of the noble organization.
“Their emergence as the leaders of Ohaneze Ndigbo, the umbrella body that unites the Igbo people, underscores the level of confidence and hope the people have in their leadership ability and their commitment to the development of the region and the nation in general.
“I pray that they will leverage their new offices to continue to work for the peace and unity of our nation and contribute immeasurably to ideas that will drive development, peace, and progress among the people.
“May God give you all, the wisdom and strength to serve the people.
A New Nigeria remains Possible.
News
Minor cabinet reshuffle: Delta gov redeploys Information Commissioner to Ministry of Special Duties
In a minor cabinet reshuffle, the Delta State Governor, Rt. Hon. Sheriff Oborevwori, has redeployed Information Commissioner to Ministry of Special Duties.
As part of the changes, Dr. Ifeanyi Michael Osuoza, the Commissioner for Information, has been reassigned to the Ministry of Special Duties.
In the interim, Mr. Charles Ehiedu Aniagwu, the Commissioner for Works, Rural and Riverine Roads, will oversee the Ministry of Information.
Also, a reliable source within the inner circle of the government has also verified the same development.
There are mixed reactions among journalists regarding Governor Oborevwori’s directive for the Ministry of Information to be overseen by Mr. Charles Ehiedu Aniagwu.
This sentiment stems from lingering grievances over the fallout between journalists and the administration of former Governor Ifeanyi Okowa.
Journalists have expressed dissatisfaction with Okowa’s refusal to acknowledge their efforts during his eight-year tenure with a ‘parting gift.’
It is worth recalling that Okowa was accused of denying journalists of same gesture of Chief James Onanefe Ibori, fully implemented by Dr. Emmanuel Eweta Uduaghan, extended to media professionals, both government house press crew and those outside the Government House.
The Emir of Kano, Muhammadu Sanusi II, has warned that fire would engulf any one trying to cause chaos in Kano State.
This was as Sanusi said the battle over Kano Emirate belonged to God, hence residents should remain calm and resist any temptation that could cause unrest.
He made the remark in a viral video while reacting to the Appeal Court judgement.
The Abuja Division of the Appeal Court had nullified the order of the Federal High Court in Kano.
The Kano Federal High Court had nullified Sanusi’s appointment following an emirate tussle in Kano State.
The order nullifying Sanusi’s appointment was issued by Justice Abubakar Liman of the Kano Division of the Federal High Court on June 20, 2024.
But, the Appeal Court faulted the ruling of the Federal High Court.
Sanusi said: “As you all know, the Appeal Court has confirmed today that the Federal High Court has no jurisdiction over emirate issues. This judgment was expected, and those who initiated the case in court knew this all along.
“Even the judge who issued the initial order was aware of the limits of his jurisdiction. Those who influenced him to make that decision also knew the truth.
“However, for the past eight months, their aim has been to promote selfish interests and instigate unrest in this part of the country.
“Despite their efforts, our greatest achievement is that the state has remained peaceful. There has been no violence or disorder. We call on everyone to continue maintaining peace and unity.
“This battle is not ours but God’s. And God does not need anyone’s help. Let us keep praying for His guidance and intervention. May God protect us, and whoever seeks to ignite chaos in Kano, may that fire consume them instead.
To those who wish harm upon Kano or its peace, may they face the consequences of their own wishes.”
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