Economic experts have projected that the current high costs of goods and food will begin to drop by the end of the first half of this year.
However, this is on the condition that the current momentum to energise the economy does not suffer any reversal.
A combination of factors including fuel subsidy removal, insecurity in parts of the country that has forced many farmers off the land and shortage of foreign exchange are said to be largely responsible for the high cost of living.
The naira, which exchanged for between N1,150 and N1,180 to the dollar as of December 31, 2023, crashed to N1,400 in January and further depreciated at the black market to N1,950 in mid-February with many speculating that it could get worse. But the naira experienced a good fortune by the middle of March following a raft of policy initiatives by the apex bank to improve the transparency and inflows of the FX market.
However, the appreciation of the naira is yet to reflect on the prices of commodities as the market has not fully adjusted to the current realities in the FX crash.
Kabir Ibrahim, National President of the All Farmers Association of Nigeria (AFAN), said it was rather scandalous that the prices of commodities were not yet reflective of the gains recorded with the naira against the greenback.
“Ideally, if the Naira is firming up, the prices of all goods should come down and should show the increase in the strength and purchasing power of the Naira,” he said.
He added: “If prices are not coming down, it’s either that the whole thing is artificial or there is lack of education on the whole matter or there is fraud in it because that’s why we kept saying that some of these items should not be dollarised.”
The AFAN boss is however optimistic that once the farmers are able to farm during this season and reap bountiful harvests, this may have a positive impact on the supply of food for the rest of the year.
Echoing similar sentiments, Peter Sunday Adebola, the Managing Director Edgefield Capital Management Limited, an investment-driven company, said several factors may be at play and could possibly be fueling the soaring cost of commodities thus far.
