₦airaland Forum

Diesel price is down, dollar is down and it's going for on for a month plus but instead the prices didn't stabilize but increased further.

Dear marketers your not the gainers here but instead biggest losers in the long term.
As time goes on, the self inflicted economic hardship you imposed on us would create negative reaction.
That 20k you pay your security won't be enough any longer and he'll have no option than to steal from you, most youths would become agberos and you'll pay more road tax on transportation.
You no longer depend on quantity but price to make gain which would increase unemployment.
In the end your profit becomes useless as other business also hiked their price, your 20k previous gain that moved to 50k would go down on easily, the Sunday beer you drink for 6 to 10 k now cost 15 to 20k.
Your kids and other services consumes your earnings and is still worthless to them.
In the long run majority of you won't survive.

Great100000:
There are indications that prices of goods and services may not come down soon despite the speedy appreciation of Naira against major foreign currencies in recent weeks.

On Thursday, US Dollars traded for N1,060, about N840 gain against N1,900 to US Dollar peak in February this year. But Vanguard findings show that prices of goods in the market are still on the rise contrary to the general expectations that with the continued positive trend in the exchange rate which started in late February, the market prices and general cost of living should be going down.

Most dealers and producers of goods and services blamed the high exchange rate for the spiral price increases in the market.

However, against the backdrop of the positive stability in the foreign exchange market, the National Bureau of Statistics, NBS, reported a further rise in inflation with a headline rate of 33.2 per cent in March as against 31.7 per cent in the previous month while food inflation rose to 40.02 per cent from 37 per cent.

Meanwhile, financial analysts and economists who spoke to Vanguard have indicated further rises in prices of goods and services in the months ahead before marginal stability can take place.

They also hinted that the current positive development in the foreign exchange market would have to be sustained over a longer period while other elements of the cost of doing business would have to come down before the impact of the lower exchange rate can positively affect the prices of goods and services.

Moreover, they explained that while price increases respond faster to upward increases in key factors of production, the reverse is the case when the factors are going down.

The analysts noted that positive exchange rate changes take time to trickle down to the prices of consumer goods. Explaining the discrepancy between the exchange rate stability against consumer price volatility, Victor Chiazor, Head, Research, FSL Securities, a Lagos-based investment house, said, ‘‘Apart from the time lag for the stability in the exchange rate to begin to reflect in the prices of goods and services, Nigerian price history shows that prices are sticky downwards but reflect immediately upwards.”

However, he gave further insight: “The rise in consumer goods prices was initially triggered by the currency devaluation along with high energy and transportation costs. But despite the recent appreciation of the Naira against the dollar, energy and transportation costs have remained high.

“Also, the appreciation in Naira will take some time to kick in before it begins to reflect in the price of goods and services.

“This price distortion shows how much dependence the economy has on foreign currency and shows that government policies towards locally manufactured goods in terms of infrastructure deficiency and incentives remain low.

“Just as we have seen inflation continue to rise despite consecutive increases in the monetary policy rate to curb it, the reality remains that the policy will require some time to kick in and take effect.

“A similar scenario is expected to play out around goods and services which are highly dependent on the exchange rate. It will take some time for the appreciation of the Naira to be transferred and trigger a drop in the cost of goods and services.”

Going forward, he said that the current policy decisions by the CBN Monetary Policy Committee, MPC, team will yield the desired result.

He, however, said that a prolonged duration of monetary tightening would become a headwind negative to economic growth.

“Hence, there is the need to effectively monitor the economy and know when to slow down on its tightening stance so as not to throw the economy into a session of negative growth.”

In his views, Ayorinde Akinloye, an Economic and Investment Strategist, said: “When economic policies are implemented, there is typically a time lag needed to see the impact of the policies on macroeconomic outcomes.
“Specific to the issue of appreciating Naira and still elevated prices of goods and services, the majority of consumer goods in circulation were produced or imported when the dollar was about N1,500 or more. As a result, we are yet to see the impact of the appreciation of the past month.

“Typically, a time lag of 60 – 90 days will be required to clear out the expensive goods before the ones imported at cheaper exchange rates begin to flow into the market.”

He, therefore, noted that the impact of the appreciation of the Naira will be felt from the end of May to June.

Speaking in the same vein, Gafar Bashiru, Senior Associate, Parthian Partners, another Lagos-based investment house, said though a stronger Naira is supposed to result in lower import costs and, eventually, a decrease in consumer goods prices, however, other factors, including structural issues, time tag, and speculative pricing, among others, have continued to fuel the current disparity.

He stated: “Exchange rate changes often take time to trickle down to consumer prices. Businesses may wait to adjust prices until they’re confident the currency appreciation is sustained. Inventory purchased at higher exchange rates may also need to be sold before price reductions occur.

“Also, factors like high transportation costs, insecurity, or inefficiencies in distribution networks can keep prices high despite a stronger currency and businesses might be hesitant to lower prices immediately, fearing future devaluation, leading to “sticky prices.”

“While prices are yet to drop, we are beginning to see a slower rate of increase. The month-on-month inflation figure for March reveals that the rate of increase in the average price level is less than the rate of increase in February 2024. This is a trend that is expected to be maintained in the coming months.

“It is also important to consider the base effect in the year-on-year figures. Considering that consumer prices were already high before the Naira appreciation occurred in the last two months (headline and food inflation stood respectively at 29.90% and 35.41% in January vs 33.20% and 40.00% in March), the decrease in prices might seem less significant.”

He further noted that in addition to the recent improvement in the strength of the Naira, policies that can help achieve sustainable price stability lie largely with the fiscal authority.

He cited structural reforms and focus on domestic production of competitive advantageous products as part of the fiscal solutions needed.

According to him, “Addressing structural bottlenecks in the economy, like improving transportation infrastructure and reducing bureaucratic hurdles, can make businesses more efficient and potentially lower production costs. This will translate to lower consumer prices.

“Implementing policies that incentivize local production of essential goods will lessen reliance on imports and make prices less vulnerable to fluctuations.”

Inflation bottleneck

Expressing similar views, David Adonri, Vice Chairman, Highcap Securities, argued that the main factor fueling Nigeria’s galloping inflation is insecurity, adding that import dependence on manufactured items is another cause. “When supply-side measures are taken, inflation will start declining. Inflation can start declining from the fourth quarter,” he stated.

Chinazom Izuora, Senior Associate, Parthian Securities, said: “It’s important to note that inflation is a lagging indicator.

Therefore, the effect of policy pronouncements in a given month will not be evident until subsequent months. However, it is noteworthy that headline inflation on a month-on-month basis moderated to 3.02% in March, which was 0.10% lower than the rate recorded in February 2024 (3.12%).

“This indicates a slowdown in the rate of inflation, though a marginal decline. We might not see a significant decline in the rate of inflation until Q3/Q4 but we expect to see gradual moderation month on month.”

https://www.vanguardngr.com/2024/04/exchange-rate-why-prices-of-goods-will-remain-high-despite-naira-appreciation/

Na owner Sabi,we all won't live this life forever....

Hmm

[quote author=SpecialAdviser post=129534191]How can it come down when diesel is still sold at N1500 per liter. Abi no be lorry dey convey goods? How can it come down when everywhere is insecurity? Abi farmers are now free to go to their farms?

Only fuulish people that are falling for agbado propaganda? APC gathered jobless youths in one computer location and started paying them to create multiple social media accounts to spread propaganda and decieve the gullible.

They should continue, if dolar goes up again, the prices of good will go further up. That may be the elastic limit for even their agbado supporters. Na watch we dey watch


But u were glad when dollar was just going up
..but now sad
U need deliverance .

Greedy Nigerians are the ones to answer this queestion.

They shouted dollar too high that is why they sell high price now dollar is going down but their greed won't let them think then later started blaming the govt...

Gov should open border and allow importers bring in food.

Food is expensive because our farmers aren’t producing enough. You have to address issues of insecurity, storage, diesel prices, roads, etc but they will start bearing fruits in the medium to long term.

In the interim, customs should allow food to come in to bridge production gap.

Gov should stop going to shops and tell them what prices to sell. Once goods are plentiful, they would be forced to lower prices.

Only time gov can intervene is if market sellers are colluding to fix prices. If yam sellers are meeting underground to fix prices for example, gov can charge them to court with evidence.

Great100000:
There are indications that prices of goods and services may not come down soon despite the speedy appreciation of Naira against major foreign currencies in recent weeks.

On Thursday, US Dollars traded for N1,060, about N840 gain against N1,900 to US Dollar peak in February this year. But Vanguard findings show that prices of goods in the market are still on the rise contrary to the general expectations that with the continued positive trend in the exchange rate which started in late February, the market prices and general cost of living should be going down.

Most dealers and producers of goods and services blamed the high exchange rate for the spiral price increases in the market.

However, against the backdrop of the positive stability in the foreign exchange market, the National Bureau of Statistics, NBS, reported a further rise in inflation with a headline rate of 33.2 per cent in March as against 31.7 per cent in the previous month while food inflation rose to 40.02 per cent from 37 per cent.

Meanwhile, financial analysts and economists who spoke to Vanguard have indicated further rises in prices of goods and services in the months ahead before marginal stability can take place.

They also hinted that the current positive development in the foreign exchange market would have to be sustained over a longer period while other elements of the cost of doing business would have to come down before the impact of the lower exchange rate can positively affect the prices of goods and services.

Moreover, they explained that while price increases respond faster to upward increases in key factors of production, the reverse is the case when the factors are going down.

The analysts noted that positive exchange rate changes take time to trickle down to the prices of consumer goods. Explaining the discrepancy between the exchange rate stability against consumer price volatility, Victor Chiazor, Head, Research, FSL Securities, a Lagos-based investment house, said, ‘‘Apart from the time lag for the stability in the exchange rate to begin to reflect in the prices of goods and services, Nigerian price history shows that prices are sticky downwards but reflect immediately upwards.”

However, he gave further insight: “The rise in consumer goods prices was initially triggered by the currency devaluation along with high energy and transportation costs. But despite the recent appreciation of the Naira against the dollar, energy and transportation costs have remained high.

“Also, the appreciation in Naira will take some time to kick in before it begins to reflect in the price of goods and services.

“This price distortion shows how much dependence the economy has on foreign currency and shows that government policies towards locally manufactured goods in terms of infrastructure deficiency and incentives remain low.

“Just as we have seen inflation continue to rise despite consecutive increases in the monetary policy rate to curb it, the reality remains that the policy will require some time to kick in and take effect.

“A similar scenario is expected to play out around goods and services which are highly dependent on the exchange rate. It will take some time for the appreciation of the Naira to be transferred and trigger a drop in the cost of goods and services.”

Going forward, he said that the current policy decisions by the CBN Monetary Policy Committee, MPC, team will yield the desired result.

He, however, said that a prolonged duration of monetary tightening would become a headwind negative to economic growth.

“Hence, there is the need to effectively monitor the economy and know when to slow down on its tightening stance so as not to throw the economy into a session of negative growth.”

In his views, Ayorinde Akinloye, an Economic and Investment Strategist, said: “When economic policies are implemented, there is typically a time lag needed to see the impact of the policies on macroeconomic outcomes.
“Specific to the issue of appreciating Naira and still elevated prices of goods and services, the majority of consumer goods in circulation were produced or imported when the dollar was about N1,500 or more. As a result, we are yet to see the impact of the appreciation of the past month.

“Typically, a time lag of 60 – 90 days will be required to clear out the expensive goods before the ones imported at cheaper exchange rates begin to flow into the market.”

He, therefore, noted that the impact of the appreciation of the Naira will be felt from the end of May to June.

Speaking in the same vein, Gafar Bashiru, Senior Associate, Parthian Partners, another Lagos-based investment house, said though a stronger Naira is supposed to result in lower import costs and, eventually, a decrease in consumer goods prices, however, other factors, including structural issues, time tag, and speculative pricing, among others, have continued to fuel the current disparity.

He stated: “Exchange rate changes often take time to trickle down to consumer prices. Businesses may wait to adjust prices until they’re confident the currency appreciation is sustained. Inventory purchased at higher exchange rates may also need to be sold before price reductions occur.

“Also, factors like high transportation costs, insecurity, or inefficiencies in distribution networks can keep prices high despite a stronger currency and businesses might be hesitant to lower prices immediately, fearing future devaluation, leading to “sticky prices.”

“While prices are yet to drop, we are beginning to see a slower rate of increase. The month-on-month inflation figure for March reveals that the rate of increase in the average price level is less than the rate of increase in February 2024. This is a trend that is expected to be maintained in the coming months.

“It is also important to consider the base effect in the year-on-year figures. Considering that consumer prices were already high before the Naira appreciation occurred in the last two months (headline and food inflation stood respectively at 29.90% and 35.41% in January vs 33.20% and 40.00% in March), the decrease in prices might seem less significant.”

He further noted that in addition to the recent improvement in the strength of the Naira, policies that can help achieve sustainable price stability lie largely with the fiscal authority.

He cited structural reforms and focus on domestic production of competitive advantageous products as part of the fiscal solutions needed.

According to him, “Addressing structural bottlenecks in the economy, like improving transportation infrastructure and reducing bureaucratic hurdles, can make businesses more efficient and potentially lower production costs. This will translate to lower consumer prices.

“Implementing policies that incentivize local production of essential goods will lessen reliance on imports and make prices less vulnerable to fluctuations.”

Inflation bottleneck

Expressing similar views, David Adonri, Vice Chairman, Highcap Securities, argued that the main factor fueling Nigeria’s galloping inflation is insecurity, adding that import dependence on manufactured items is another cause. “When supply-side measures are taken, inflation will start declining. Inflation can start declining from the fourth quarter,” he stated.

Chinazom Izuora, Senior Associate, Parthian Securities, said: “It’s important to note that inflation is a lagging indicator.

Therefore, the effect of policy pronouncements in a given month will not be evident until subsequent months. However, it is noteworthy that headline inflation on a month-on-month basis moderated to 3.02% in March, which was 0.10% lower than the rate recorded in February 2024 (3.12%).

“This indicates a slowdown in the rate of inflation, though a marginal decline. We might not see a significant decline in the rate of inflation until Q3/Q4 but we expect to see gradual moderation month on month.”

https://www.vanguardngr.com/2024/04/exchange-rate-why-prices-of-goods-will-remain-high-despite-naira-appreciation/

Dangote, Bua and Lafarge should drop price of cement back to 4k.

bigsmoke2:
It's greed that has kept the prices high. People who made criminally high profits when FX was high don't want to take the loss of market shifts.

They were quick to lie on dollar but now mentioning cost of transportation

We are just the problem

Propaganda upon propaganda

God forbid BAT thing

Sheriman:
Make exchange rate go back to N1900 to $1 then if things wouldn't come down

you share my view

To summarise it all. Nigerians are just wicked people. From top to the bottom. It's easy to raise cost of goods once the dollar appreciate even when they still got goods in stocks. But when Naira appreciate, they needed to wait and see before price comes down which might take up to 60-90 days. Hypocrite everywhere. You see them using different grammars to defend their selfishness. Its high time the Federal government start regulating costs. Laws need to be made to restrict Business Organisations to some certain levels.

Dobodobo04:
Gov should open border and allow importers bring in food.

Food is expensive because our farmers aren’t producing enough. You have to address issues of insecurity, storage, diesel prices, roads, etc but they will start bearing fruits in the medium to long term.

In the interim, customs should allow food to come in to bridge production gap.

Gov should stop going to shops and tell them what prices to sell. Once goods are plentiful, they would be forced to lower prices.

Only time gov can intervene is if market sellers are colluding to fix prices. If yam sellers are meeting underground to fix prices for example, gov can charge them to court with evidence.

Respect bro. You said it all.

God bless.

All these dogon turanchi does not stop from food being out of the reach of the common man. I feel for the children who will grow up being malnourished, that means one generation is going to be intellectually deficient. Elections have consequences.

pretydiva:
Their excuse is they still have old stocks to sell. But once they hear naira has depreciated, they immediately inflate their price not minding if it’s an old stock.

Na we Dey do ourselves for this country. We too get ojukoko eyes

You clearly don’t understand business madam
So if you are in their shoes n you hear that dollar has appreciated you will immediately reduce the prices of your goods?Or you hear that dollar has appreciated n you leave the prices of your goods the way it is?
If your answer is yes then you really need to answer the simple question.
WHY ARE YOU IN BUSINESS?

Check our blood, na thief full am....we are all thiieves

phransix2:
You don't need to explain anything. The Nigeria market is full of wicked people that thrives because nobody checkmates them.

The period Dollar was on the rise, items on their shelves that was bought when dollar was low they increased the prices right away.

Lol... you must not be a business person... ok just imagine that before the rise ... you cud purchase 10 cartons of Indomie for #35000... but then, after the rise, you went to the market and you were told by your supplier that a carton is now 15k ?... wud you still sell the old ones at #3500 a carton?

The price of petrol determined the price of food commodities period.

caracas:
You clearly don’t understand business madam
So if you are in their shoes n you hear that dollar has appreciated you will immediately reduce the prices of your goods?Or you hear that dollar has appreciated n you leave the prices of your goods the way it is?
If your answer is yes then you really need to answer the simple question.
WHY ARE YOU IN BUSINESS?

So if dollar depreciates and you still have old stocks that automatically mean you inflate your price? Oga na you sabi

Antiurchins:
The way dollar will jump 🦘🦘🦘 back to 2000 like a kangaroo will be brutal this time because what they have been doing is artificial depreciation of the dollar. Once the reserves they used in servicing the forex finishes, it will go back to high. It's not the first time, Buhari did the same thing. That's the reason Nigerian foreign reserves went down recently. If the naira is naturally appreciating against the dollar, it will instantly reflect on the prices of Products in the country

Artificial depreciation of the dollar you say? Is it possible for a country to depreciate the currency of another?

You deserve an award as the most idiotic fool in the world. Just take your award and celebrate.

Goods we bought at 1900 exchange rate just landed for clearance at Apapa this week
Import by water takes month

Sheriman:
Make exchange rate go back to N1900 to $1 then if things wouldn't come down

Things we bought at 1900/$ then for 500naira will be 2500 when naira goes back to 1900 now... Everybody dey madt for this country

pretydiva:
Their excuse is they still have old stocks to sell. But once they hear naira has depreciated, they immediately inflate their price not minding if it’s an old stock.

Na we Dey do ourselves for this country. We too get ojukoko eyes

You guys have no idea how business works besides this inflation you are experiencing is focused on food. Other prices are going down

SpecialAdviser:
How can it come down when diesel is still sold at N1500 per liter. Abi no be lorry dey convey goods? How can it come down when everywhere is insecurity? Abi farmers are now free to go to their farms?

Only fuulish people that are falling for agbado propaganda? APC gathered jobless youths in one computer location and started paying them to create multiple social media accounts to spread propaganda and decieve the gullible.

They should continue, if dolar goes up again, the prices of good will go further up. That may be the elastic limit for even their agbado supporters. Na watch we dey watch

Na diesel now bah .. were*

bigsmoke2:
It's greed that has kept the prices high. People who made criminally high profits when FX was high don't want to take the loss of market shifts.

They should not even take loss but anyone that bought at 1200 a dollar but still selling like they bought at 1900 will use the profit nurse sickness till dey die

bluefilm:
Propaganda upon propaganda

God forbid BAT thing

Prices go up, propaganda.
Prices refuse to come down propaganda.

Then what is propaganda?

So what's the whole point of the naira appreciation then?

SpecialAdviser:
How can it come down when diesel is still sold at N1500 per liter. Abi no be lorry dey convey goods? How can it come down when everywhere is insecurity? Abi farmers are now free to go to their farms?

Only fuulish people that are falling for agbado propaganda? APC gathered jobless youths in one computer location and started paying them to create multiple social media accounts to spread propaganda and decieve the gullible.

They should continue, if dolar goes up again, the prices of good will go further up. That may be the elastic limit for even their agbado supporters. Na watch we dey watch

you just said it all especially the first paragraph.
You perfectly nailed it

pretydiva:
So if dollar depreciates and you still have old stocks that automatically mean you inflate your price? Oga na you sabi

Capital yes! Cos you are in business to make profits n not to make losses … if you have old stocks n dollar increases and you still sell at old rate you have automatically made a loss, cos you may need to double that money to get new stocks….

Nothin goes up comes down in Nigeria.

FuckYeyeMods:
You guys will continue to justify this evil things markets are doing to Nigerians.

Because they are worse than them and will do worse if given the same opportunity.

Articles like this is just embolding those wicked traders