Economists have cautioned that it will take some time for Nigerians to feel the impact of the recent strengthening of the naira against the dollar on the prices of commodities in the country.
The Chief Executive Officer of Economic Associates, Ayo Teriba, explained that the effect of the naira’s appreciation on prices usually exhibits a time lag.
He pointed out that goods purchased at the old exchange rate will still be tied to that rate until new stock is acquired.
The president of the Nigerian Economic Society, Adeola Adenikinju, also noted that sellers will continue to sell at current prices until they replace their existing stock bought at higher rates, to avoid losses.
According to Adenikinju, the actions of the Central Bank of Nigeria (CBN) in the coming weeks will also influence sellers’ decisions regarding price adjustments, as they monitor the market for stability in the naira.
Nigeria has been grappling with soaring inflation, which reached 31.70 percent in February, primarily driven by food inflation, which rose to 37.92 percent.
To address this, News About Nigeria reported that the CBN raised the benchmark interest rate to 24.75 percent in its recent Monetary Policy Committee meeting.
Professor of Economics at Babcock University, Onakoya Adegbei, explained that the delay in price reduction is not unique to Nigeria and is often driven by market expectations and production rigidity.
Favour Uche, a foodstuff seller at EFAB Market, confirmed the persistence of high prices despite the naira’s appreciation.
She said the high prices are due to the expenses incurred by traders to maintain product quality.
“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, added that prices did not decrease even with the fall in the dollar’s value.
