Market Update, March 2013

Issued: April 19, 2013

Inflation: The Consumer Price Index (CPI) was largely stable in nearly all zones of Somalia in March. Annual inflation reduced in South-Central, increased in the North Somaliland Shilling (SlSh) zone and remained relatively stable in Somali Shilling (SoSh) zone. Compared to the base period (March 2007), the minimum cost of living is elevated in all areas. 

Exchange rate: The SoSh continued to appreciate against the US Dollar (USD), while the SlSh depreciated marginally during March. A similar trend was observed in the  exchange rate movements over the past year, with a more pronounced gain discernible for Somali Shilling against the US Dollar. The latter development is attributable to foreign and domestic capital inflows particularly into Mogadishu-city, dwindling availability of SoSh notes and continued dollar inflows through humanitarian interventions. The weakened SlSh is due to increased supply and circulation of new higher denomination notes. 

Local grain price trends were mixed; stable in most markets, decreased in north SoSh zone but increased rapidly in the Sorghum Belt, particularly in Hiran, Bay and Bakool. The appreciation of cereal prices is due to heightened demand from neighbouring deficit regions, reduced household stocks and a decline in food assistance. Overall, cereal prices remained at lower levels in most markets when compared to March 2012 except for markets in Gedo and Bakool, which are significantly higher. 

Prices of imported commodities quoted in local currency continued to decline in the first quarter of the year in most markets. An exception was a continued acceleration in diesel prices in some markets in the North following the ban on diesel imports from Yemen by the Regional Government in Puntland. Compared to the same period last year, imported commodity prices are significantly lower in most SoSh markets but higher in SlSh regions. The decline in prices of imported food in local currency terms is a result of the appreciation of the SoSh, increased import flows occasioned by improved cargo clearance and handling capacity at the ports and continued humanitarian assistance. The increase in import prices in Somaliland markets is attributable to the reduced value of the SlSh against the USD.

Livestock price trends were mixed in March; goat prices declined in most markets of the South, but increased in the North. Month-on-month reduction in export quality goat prices was due to seasonal thinning in demand. Livestock prices are significantly higher than a year ago in most monitored markets. The appreciation of livestock prices is due to rising consumption needs in Mogadishu and reduced supply in view of the ongoing rains in the south, limiting trekking.

Labour wages have started to improve mainly in the key agricultural zones in line with seasonal increase in agricultural labour opportunities. Casual wages are significantly higher compared to their levels a year ago in most markets. 

Terms of Trade (ToT) between labour wage and cereals remained unchanged in most regions in March 2013. However, the ToT,  reduced moderately in Banadir but significantly in most of the Sorghum Belt on account of increased cereal prices.  The purchasing power of the poor, who predominantly rely on casual labour, is stronger in most areas except in Gedo and Bakool where the ToT remained depressed compared to the same month last year.

Juba Valley: Prices of most commodities including imported food and maize declined while livestock values increased slightly. The ToT (12Kg/daily wage rate) maintained the previous month's level. Yearly comparison indicates significantly lower prices for imported food and local cereals and considerably elevated prices for livestock in most markets. ToT between casual labour and cereals has improved significantly. 

Sorghum Belt (Bay, Bakool, Gedo, Hiran): Reduction in prices of imported food and livestock were recorded in March while evolution of cereal prices was mixed, increased in Hiran, Bay and Bakool but remained stable in Gedo.  The ToT between labor and cereals remained stable in Bakool but decimated in Gedo, Bay and Hiran. Year-on-year price comparisons indicate mixed trend in cereal prices, stability in livestock prices and significant decrease in imported commodity prices. ToT decreased in Gedo and Bakool and increased in Bay and Hiran. 

Shabelle Valley: Monthly prices of imported food declined while maize and livestock quotations increased slightly. The ToT sustained February levels, closing the month at 14kg of maize for a day's worth of labor. Compared to the levels in the reference period in 2012, prices of most imported commodities and cereals are significantly lower while prices of livestock are considerably higher, while ToT has improved. 

Central: Imported food prices decreased slightly, but the cost of red sorghum and livestock increased somewhat in March. Annual comparisons indicate significant decreases in the prices of all items except livestock, which have increased significantly. ToT (local quality goat/ rice) is higher when compared to both the preceding month and the same period in the last year (Mar '12), currently standing at 63kg/local quality goat. 

Northeast: Local cereal prices exhibited monthly decline while prices of most commodities remained generally stable; exceptions were diesel and livestock which increased. Prices are significantly lower compared to a year ago for imported commodities and red sorghum; those for livestock are higher. ToT (rice/ local goat) improved (84kg/local goat) over the past month and is equally higher when compared to a year ago (Mar '12).  

Northwest: Prices of most monitored commodities were generally stable except those of diesel, wheat flour and local quality goat,  which increased somewhat during the reporting month. The prices of goats and imported food rose in the past year, while cereal prices remained stable.  ToT between cereal (white sorghum) and labor wage remained unchanged (12kg/ daily labour rate)  compared to the previous month and increased compared to a year ago. 

Banadir: Prices of imported commodities and of a local quality goat decreased while maize price remained stable compared to February 2013 levels.  Year-on-year price comparisons indicate decreased trends for most of the monitored items.  ToT of white maize to labor wage decreased by one unit from the previous month, closing the month at 15 kgs/ daily labor rate.

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