Economists predict that Nigerians may not immediately feel the effects of the recent strengthening of the naira against the dollar on commodity prices in the country. According to experts, there is a time lag between currency fluctuations and price adjustments in the market.
Ayo Teriba, the Chief Executive Officer of Economic Associates, explained that the prices of goods purchased at the old exchange rate will still be influenced by that rate until new stock is acquired and sold. This delay in price adjustments is due to the economic rationale of avoiding losses by selling existing stock at higher prices.
President of the Nigerian Economic Society, Adeola Adenikinju, emphasized that market players will only reduce prices once they replace their current stock with items purchased at the new exchange rate. The actions of the Central Bank of Nigeria in the coming weeks will also play a significant role in determining market behavior.
Inflation in Nigeria has been on the rise, primarily driven by food inflation, which reached 37.92 percent. To combat this, the Central Bank raised the benchmark interest rate to 24.75 percent. Professor Onakoya Adegbei from Babcock University highlighted that price adjustments often come with a lag due to market expectations and production rigidity.
Local traders like Favour Uche and Abdul Yusuf confirmed that despite the recent decrease in the value of the dollar, prices of goods like rice and meat have not decreased. They cited challenges such as maintaining product quality in the face of infrastructural constraints as reasons for the sustained prices.
Overall, the impact of currency fluctuations on commodity prices in Nigeria may take some time to materialize fully, as market players navigate the complexities of price adjustments in response to changing economic conditions.
