Sierra Leoneans say they are tired of how inflation is impact their wallets as higher prices continue to be an economic and political issue.
Economists have many ways of measuring how prices change over time. Two key measures are overall, or headline, inflation, which tracks the prices for a basket of goods and services, and core inflation, which tracks many of the same items but excludes those with unusually jumpy prices, such as gasoline, foodstuff, and transportation fares.
In Sierra Leone over time these indicators continue to move in different directions with vulnerabilities such as geopolitical tensions and high international prices for food and energy prices driving local prices up.
According to the Monetary Policy Committee of the Bank of Sierra Leone, inflationary pressures has been softening, with headline inflation decreasing from 40.69 per cent in March 2024 to 35.84 per cent in May 2024. It is now in the low 30s. This decline is attributed to tight monetary policy, exchange rate stability, increased domestic food production, and reduced international food and energy prices. Despite this positive trend, risks to inflation persist, including potential spikes in global commodity prices and crude oil production cuts.
At the Central Bank’s celebration of its 60th Anniversary president Bio challenged the MPC to drop inflation to lower 20s by the end of the year and to single digit in the medium term. However, despite the bank’s efforts prices continue to rise for the average consumer. With the majority of the population not being able to access the $1.90 (close to NLe50) needed for daily survival, the rise in food prices continue to exacerbate the health, education and other outcomes of the most vulnerable. There is confusion that lowering inflation will lead to lower prices. Dropping inflation is supposed to lead to slow and manageable price increases that the average man can afford. But when they have been rising as high as in Sierra Leone, then we are witnessing cost-push inflation which involves manufacturers passing the cost of production to the consumer, although our country does not produce much of what we mainly consume.
This has not been the reality in Sierra Leone as despite the efforts made by the Central Bank’s MPC, prices of goods and services, even home grown varieties, continue to rise on the market. There is a need for the Central Bank to step into the free market economy fray and stabilise the prices of strategic goods and services necessary for the average man to take part in the nation’s economic activity.
But what everyone wants to know is when will inflation go to the low single digits? While no one knows the answer, but with the Bank Governor’s focus and monthly falls in inflation, it may happen soon. But at this point, people should be less worried about inflation than they were in December 2023. While inflation is still higher than we should get used to, it’s much lower than it has been over the past couple of years.
Hopefully, that indicates the Bank of Sierra Leone is approaching its target of taking inflation to the low 20s by the end of the year and single digit in the medium term. At the Bank’s last MPC meeting it had to raise the Monetary Policy Rate to tame consumer demand and prices.
But concerns remain about inflation persisting. One risk factor is the impact of the conflicts in Ukraine, the Middle East and the Sudan Red Sea axis. It will however take a long time for the people to start feeling the impact of lower inflation on the prices of goods and services especially in the face of growing demands for certain goods and services.
Meanwhile, for goods and services critical to the people of Sierra Leone, transportation cost increased from 49.93 per cent in December 2023 to 65.31 per cent in January 2024 as with the inflation rate increased by 15.38 percentage points, year-on-year.
It is hard to keep track of the real rise in food prices in Sierra Leone but they continue to rise with increasing demands. There is a serious need and call from all and sundry for the stabilisation of prices to offset their impact on the poorest of the poor.
As communication remains a strategic need, we witnessed an increase from -2.13 per cent in December 2023 to -0.68 per cent in January 2024 as the inflation rate increased by 1.45 percentage points, month-on-month.
There is no time for leisure for the average citizen as recreation and culture increased from 0.87 per cent in December 2023 to 1.43 per cent in January 2024; restaurant and hotels costs increased from -1.41 per cent in December 2023 to 1.13 per cent in January 2024.
For as long as we continue to depend on fuel and other energy imports instead of finding and developing our own sources, fuel and energy prices continue to be in the preserve of the OPEC monopoly.
We should continue to expect for the prices of goods and services to continue to rise despite the efforts of the Bank of Sierra Leone to lower inflation as local traders continue to abuse the concept of a free market economy with little to negligent government interference.
By FORUM NEWS Business Editor
