Forex alone not determinant of commodity high prices – Expert

By Abubakar Yunusa

An Economist, Dr Chijioke Ekechukwu says Foreign Exchange (Forex) is not the only determinant of high prices of goods and services.
Ekechukwu, who is the Managing Director and Chief Executive Officer, Dignity Finance and Investment Ltd., told the News Agency of Nigeria on Tuesday in Abuja.
The expert listed the high cost of petroleum products, scarcity of food as a result of security challenges, among others as other determinants of high cost of goods and services.
Peoples Daily reported that Naira has been fluctuating at the official market, trading between N1, 300 and N1,240 to a dollar.
Ekechukwu, however, said that the crash of the dollar being experienced currently at the official market might not have significant effect on the prices of commodities.
“Traders still have stock of goods bought at a high exchange rate.
“The Naira only gained traction in the last two weeks. It is a short period therefore to ascertain stability. Fear of instability of Forex will also make traders retain old prices.
“Secondly, Forex is not the only determinant of high prices. High cost of petroleum products such as diesel and petrol are major determinants.
“Scarcity of food as a result of insecurity in the north where we have more farming activities is also another determinant, among others,” he explained.
He further explained that petroleum products prices were determined by external sources and not within the control of government.
According to him, prices of petroleum products are determined by two factors: exchange rate and global oil price.
“The global oil price is not controlled by Nigeria. However, if the government embarks on subsidy of petroleum products again, their prices will come down.
“Petroleum products prices can also come down when our refineries start working optimally,” he added