Ever since the start of the Bola Tinubu administration last year, Nigerians have been grappling with the impact of economic reforms on their daily lives. These reforms, which include subsidy removal, floating of the naira, exchange rate policies, and other measures implemented by the CBN, have resulted in soaring food prices and increased costs for essential commodities.
The ongoing situation, which has been deteriorating over the past 8 months, has resulted in a significant increase in inflation and hyperinflation. These economic challenges have been primarily driven by factors such as fluctuating exchange rates and the removal of subsidies.
In a significant shift, the exchange rate experienced a drastic change under the current administration. Prior to their tenure, the rate stood at N700 to one dollar. However, with the removal of subsidies and the adoption of a floating exchange rate system, the value of the dollar skyrocketed to N1900. Reaching its highest point in over 30 years.
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The impact of the current exchange rate, along with other factors related to the Bola Tinubu economic reforms, has had a significant effect on the food production chain as a whole. There has been a noticeable increase in the prices of food and other essential goods. Recent government data reveals a significant surge in inflation, with food prices experiencing the highest recorded increase of 39%.
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Naira Appreciates
In a surprising turn of events, the Nigerian naira has experienced a significant surge in value against the US dollar over the past weeks. The current exchange rate for the naira against the dollar is around N1,140.
In recent news, the naira has seen a significant appreciation. This has been credited to the prompt actions taken by the CBN to regulate the exchange rate and address the increasing costs of production factors. The aim is to stabilise the naira and ensure economic stability.
Despite the Central Bank of Nigeria’s efforts to curb inflation and stabilise the naira, the prices of goods, food items, and other essential commodities have shown no signs of appreciating, despite the recent gains in the currency’s value. The food price has remained unchanged despite fluctuations in the exchange rate.
Traders At Singer Market React
In an interview with the Daily News 24 Yusuf Muhammad Idris Lambu, a wholesaler of food stuffs in Singer Market Kano, expressed his confusion over the current situation. Despite the decline in the value of the dollar, the prices of commodities have not decreased, which he finds perplexing.
According to the manufacturers, they did not immediately raise the price of commodities when the dollar strengthened. However, after a two-week delay, the prices began to steadily rise, reaching their peak in the last 10 days before experiencing a decline.
The price of commodities has seen a gradual increase, mirroring the pattern of the rising dollar. It is important to note that the price of commodities is unlikely to decrease abruptly. Instead, it is expected to follow a similar trajectory as the exchange rate when it reached higher levels.
According to Yusuf, the majority of the materials used by the manufacturers were purchased during a period when the value of the dollar was at its highest. The materials are still being kept in their warehouse. “In order to observe the impact of the dollar’s decline on commodity prices, it is necessary for existing materials and stocks to be depleted before any price adjustments can take place.”
He suggested that consumers should not anticipate immediate price changes for food items. Adding that the existing stocks need to be sold before any reductions can be expected.
Yusuf has called on the government to prioritise the maintenance of the exchange rate price, emphasising that this is crucial for reducing the prices of goods in the market. “In the event that it is unable to maintain its current position, there is a likelihood of it reverting to its previous price.”
An individual named Aliyu Muhammad Yusuf, who operates as a retailer at Singer Market, expressed concern over the impact of the fluctuating dollar on their business operations. They highlighted the challenges faced during both the surge and crash of the currency.
According to his statement, the potential crash of the dollar in Nigeria does not necessarily imply a corresponding crash in the prices of goods in the market. “Despite expectations of a shake in our commodities price, it remained steady as we sold out our current stocks,”
In a recent statement, he mentioned that there is a possibility of a decrease in the price of commodities, but this change is expected to occur after the Sallah holiday. When new stock enters the market, there is a risk of incurring a loss if you haven’t sold yours yet. This is because you may have to sell it at a lower price than you initially anticipated. “This is the predicament we find ourselves in.”
According to Solomon Nnmani, a food stuff dealer in Singer, the current market prices are a result of purchasing goods when the exchange rate was high.
In a recent statement, an individual emphasised the need to refrain from solely attributing the soaring prices of food and materials to the dollar. According to him, there are various other factors at play that have led us to the current situation.
“Gas, petroleum, and diesel are still high; if the government can reduce it as it does to the exchange rate, the market can easily pick up the change compared to how it would respond to the exchange rate crash.”
Mr. Solomon also highlighted the potential impact of the dollar on the cost of certain food items. He suggested that the strength of the dollar could potentially lead to a decrease in prices. However, it would require some time before it garnered attention.
He urged the public to stay calm and patient, emphasising that the issue currently faced in Nigeria is part of a global phenomenon, affecting countries beyond Nigeria’s borders. “Nigeria’s citizens are calling for continued prayers and urging the government to reevaluate certain economic reform policies, including subsidy removal. These policy changes, if implemented, have the potential to bring about the desired transformation in the market.”
Alhaji Hashim Yusuf, a retailer from Yobe State, expressed his disappointment with the lack of change in food prices at Singer Market. Despite the recent crash, he observed no decrease in the prices of the food stuff he purchased. This has left him puzzled as to why the prices have not gone down as expected. He urged the government to investigate the market and find solutions to lower the prices of goods.
