Nigerian consumers are having taste of naira devaluation as commodity prices increase among various goods, especially on those with imported input.
As the naira now exchanges for above N296 per dollar at BDC segment against N199 a year ago, this sharp drop in naira value is reflecting on commodity prices.
Market monitor in Lagos shows prices increasing between 10 and 25 percent on certain consumer goods.
The market assessment indicates that a bag of flour now sells for N9,000 against N7,000, while there is also a marginal increase on the price of bread from N200 to N250.
Similarly, a bag of sugar now sells for N8,000 against N7,000 at Okota in Lagos, while a gallon of 25 litres of groundnut oil goes for N8,500 against N7,000 a few months ago in Isolo Market
At Ajorin Market in Apapa, a gallon of 25 litres of groundnut oil goes for N7,500 against N6,800, while a bag of rice sells for between N10,000 and N12,000, depending on the brand. A carton of a popular noodle at the same market sells for N1,500, as against N1,250 a few months ago.
Ganiyu Rashidat, a trader in Ajorin Market, who acknowledges the price increase among various goods, attributed the development to naira devaluation. “The price increase will continue as far as the naira is low against other currencies, especially the dollar,” she told BusinessDay.
Another trader, Iya Ope, at the same market, also decried the price increase, saying it might scare away customers.
Also, companies are facing operations difficulties over the naira devaluation. John Holt Nigeria plc, one of the most diversified companies in Nigeria, was recently reported to be complaining that the naira devaluation was hurting its profits.
For instance, the company’s operating profit as of September 2015, dropped by 18.50 percent to N1.63 billion from N2 billion the previous year.
This year is predicted to be tough for companies as the naira devaluation continues, a move by the CBN to protect the foreign reserve from continuous fall.
Also recognising that the naira devaluation policy is hurting firms whose businesses largely lean on foreign exchange for input, Bamidele Adetunji, managing director, Montage Cable Network, said in a monitored report that the naira devaluation was not business friendly as “it has potential to escalate cost of operations for many SMEs.”
Adetunji noted while speaking at the unveiling of some channels by his organisation recently in Lagos, “government’s devaluation of the local currency would affect Nigerian SMEs that source their raw materials and contents overseas.”