Issued: 18 June 2010

Exchange Trends

Since December 2009, the SoSh has remained relatively stable or slightly depreciated in most markets of the Central, Northeast and South. For instance, in Mogadishu’s main Bakaara market,  one US dollar (USD) was exchanged for SoSh 31,800 in May 2010, indicating marginal depreciation (down from 31,550SoSh/USD) since December 2009. Similar trends were replicated in other markets of SoSh areas with observed depreciation of 1-5% over the same period.  However, compared to the base period of  March 2007, the value of SoSh is still only about half its previous value. The SlSh has also depreciated between December 2009 and May 2010, by about 5 percent (from SlSh 6,400 to SlSh 6,700 against USD). However, the currency has gained about 4% in value since May last year. The exchange rate in Somaliland is relatively stable compared to other parts of the country, showing only 7% depreciation from the reference year (March 2007).

Import Commodity Prices

Prices of imported commodities (petrol, diesel, rice, wheat flour, sugar, vegetable oil) have shown mixed trends since December 2009 with marginal decline for the imported food prices (1-12%) and increase for petrol (1-4%).  Compared to May 2009, petrol prices are 1-7% higher,  rice  and vegetable oil declined by 1-9%, while sugar and diesel exhibited significant increases in prices, in the range of 23-65% and 3-43% respectively. The highest increase in diesel price was observed in Mogadishu (43 percent) while for sugar, the biggest price change was noted in Bossaso market (increase of 65%). The main contributing factors for increased sugar and diesel prices include, reduced imports, greater inland transportation costs as well as global crude oil price rise since April 2009  (Figures 9 and 10). In the last month Central and Juba Valley demonstrated the highest sugar and diesel prices equivalent to SoSh 29,170 and SoSh 33,800 respectively.  Compared to the pre inflation levels (March 2007), the prices of all commodities from the month of May 2010 were  103 - 230% higher in SoSl areas and 7-70% higher in the SlSh areas.

Cost of Living for Urban Poor

Since the beginning of the year, the Consumer Price Index (CPI) or the cost of the Minimum Expenditure Basket (MEB) has shown relatively stable trends in Somali shilling zones but declined by 5% in Somaliland. Specifically, the CPI increased slightly in Central (3%) and South (7%) respectively but declined in North SoSh zone (9%) over the same period. However, over the last two months (since March 2010), the CPI has  declined in Central by 8% and further in the northern SoSh areas by 12% while remaining stable in the South and SlSh areas (Figure 11). Compared to the reference base period (March 2007) current CPI levels are 93 - 147% higher in all Somali Shilling areas and 17% higher in Somaliland Shilling areas. In May 2010, the highest cost of MEB in SoSh areas (3,637,283 SoSh) was recorded in the North, while the lowest (1,907,780SoSh) was in the South. The MEB cost was equivalent to 879,303 SlSh in the North SlSh areas.

The CPI changes over the last two months are attributable to mixed price trends of the main food commodities included in the MEB. In Central the CPI was pulled down by a significant decline of milk price (34%) and modest decreases in the prices of sugar (3%) and vegetable oil (1%) that have offset the concurrent marginal increase in cereal prices (2-3%). The slowing inflationary impact in the Northeast helped reduce the prices of milk (21%), sugar (16%), sorghum (13%), vegetable oil (8%) and wheat flour (3%). The steady CPI in the Northwest is due to offsetting sorghum price dynamics in different markets, while in the South this is attributable to relative stability of the sorghum price and decline in the prices of sugar (10%) and milk (6%) that have balanced out the marginal price increases for wheat flour (6%) and vegetable oil (2%).