An economist, Chijioke Ekechukwu, says foreign exchange (forex) is not the only determinant of high prices of goods and services, the News Agency of Nigeria reports.
Mr. Ekechukwu, Chief Executive Officer of Dignity Finance and Investment, on Tuesday in Abuja, listed the high cost of petroleum products and the scarcity of food due to security challenges as other determinants of the high cost of goods and services.
Naira has been fluctuating at the official market, trading between N1,240 and N1,300 to a dollar.
However, Mr Ekechukwu said that the dollar crash currently being experienced at the official market might not significantly affect 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 the instability of the forex will also cause traders to 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 the government.
According to him, the prices of petroleum products are determined by two factors: the exchange rate and the 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.
