While the naira has appreciated lately against the US dollars, the negative effect of the local currency’s earlier depreciation remains a challenge to many people’s existence.
For instance, Dayo Kunle, a business developer based in Akoka, Lagos Nigeria has had to reduce the quantity of food he takes due to food inflation.
According to him, “Since the naira devaluation up till now, I haven’t been able to buy chicken. I mostly rely on eggs, and I’ve had to reduce the number of times I take eggs because of the skyrocketing prices. Bread is out of my food equation,” he told BusinessDay.
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The latest consumer price index (CPI) report by the National Bureau of Statistics (NBS) shows inflation rose to 33.2 percent in March from 31.70 percent in February, while food inflation rose to 40.01 percent from 37.90 percent. This will be the 15th consecutive monthly increase, BusinessDay reported earlier.
Opeyemi Olutosin, a second-degree student at University of Lagos said that she hasn’t experienced better purchasing power because not all products have reflected the naira gain.
“It hasn’t improved my purchasing power because not all commodities have been affected by the naira gain. I think only noodles have dropped in price,” she said.
BusinessDay’s earlier survey of some stores across Lagos showed that the price of 70g Indomie Regular Chicken noodles dropped to N250 from N300 last month. While its 40-pack carton of Indomie fell to N10,000 from N12,000.
The naira had last week gained 12.57 percent against the dollar which was quoted at N1,072 on Wednesday in the official market and N1000 at the parallel market.
Usman Gafar, a trader in Lagos, said he is now being made to believe that naira rates don’t determine the price of commodities anymore.
“I bought a carton of Chivita Active at N1,000 some days ago, only to find it at N1,200 yesterday. When I asked the vendor why, she said that she just restocked and the price had gone up again. I am now convinced that the dollar has nothing to do with the rise in commodities,” Gafar said.
Prices have continued to increase as vendors restock, though in some areas like electronic appliances, there’s been a reduction, Gafar stated.
However, Tope Balogun, a fashion entrepreneur in Lagos, said that some clothes prices have reduced but only marginally.
“Some clothes I used to buy for N30,000 now sell for N27,000. Some only have a N500 reduction in goods, which has increased sales since customers feel relieved enough to use the reduction to cover their delivery fees. We are solely getting there,” she stated.
“The inflation figure is for March and the appreciation of the country currency began about three weeks ago so the impact of the appreciation is not likely to manifest immediately,” Muda Yusuf, chief executive officer of the Centre for the Promotion of Private Enterprises (CPPE) told BusinessDay earlier.
The inflation rate should begin to decline between one or two months,” he stated.
The International Monetary Fund (IMF), in a recently published report, stated that inflation caused by currency depreciation in Sub-Saharan African (SSA) countries is eight times stronger during a depreciation than an appreciation.
The Fund stated that a low level of competition in markets in SSA countries contributed to this because only a few market players dominated pricing.
“The low level of competition in emerging and developing economies meant that firms in these economies generally have greater pricing power; as a result, they can swiftly pass exchange rate depreciations through to domestic prices,” IMF said.
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“Lack of competition among firms in these economies has had significant costs, hurting the poor through higher prices of essential items and undermining growth and the ability of the economy to absorb shocks,” it added.
The Federal Competition and Consumer Protection (FCCPC) said in a recent report that it is committed to ensuring a fair and competitive marketplace for all Nigerians.
“While the FCCPC cannot directly regulate prices, the Commission will utilise its existing legal framework to enforce fair competition and consumer protection provisions.”
“This includes monitoring and investigating unusual price hikes, addressing complaints filed by consumers, and taking action against any businesses found to be engaging in anti-competitive practices such as price-fixing, price gouging or cartel formation,” the report stated.
They also encouraged Nigerians to report prices they feel have been inflated.
“The FCCPC is committed to ensuring a fair and competitive marketplace for all Nigerians. We encourage consumers to continue reporting suspected price gouging and other unfair trade practices,” the report said.
