ETHIOPIA MONTHLY MARKET WATCH November 2010

This situation attributed to the devaluation of local currency and the good ... In November 2010, the average wholesale nominal prices of maize in major urban markets continued to ... for cigarettes and tobacco, 23.3% for clothing and footwear ...
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ETHIOPIA MONTHLY MARKET WATCH

November 2010

Highlights •

The Government of Ethiopia has adjusted retail prices of fuel following the increases of crude oil prices on the international market in the first dekad of December 2010.



The country level general inflation calculated on 12 months moving average in November 2010 stood at 7.5%; food inflation at 0.8%; and non – food inflation at 18.6%. The food inflation rate that stood below zero for the last nine months moved up and reached at 0.8%.



The local prices of cereals in the month stood below the import parity prices; 60% for maize, 37% for wheat and 12% for sorghum. This situation attributed to the devaluation of local currency and the good Meher harvest of the main harvesting season.



In November 2010, the average wholesale nominal prices of maize in major urban markets continued to decline by about 3% while for wheat increased by the same percent and stable for sorghum as compared to October 2010.

Special Report – Adjustment to Fuel Prices The Government of Ethiopia has adjusted retail prices of fuel following the increases of crude oil prices on the international market in the beginning of December. The price of crude oil in the first dekad of December reached about US$ 89 per barrel. Accordingly, the retail prices of fuel was adjusted for the next one month and at Addis Ababa prices have increased by; 4.57% for benzene, 4.26% for kerosene and 4.33% for diesel. Compared to a year and six months ago the increases were higher respectively; 25.5% and 21.77% for benzene, 30.31% and 25.86% for diesel and 32.62% and 25.94% for kerosene.

A. Inflation and Consumer Price Index In November 2010, the country level general inflation calculated on 12 months moving average stood at 7.5%; Figure 1: Trends of Consumer Price Index food inflation at 0.8%; and non – food inflation at 18.6%. The food inflation rate that stood below zero for the last nine months moved up and reached at 0.8%. Compared to November 2009, the country level General Consumer Price Index (GCPI) has increased by 10.2%. This increase in the GCPI is attributed to the rise observed in the indices; 5.8% for food, 7.4% for beverages, 36.4% for cigarettes and tobacco, 23.3% for clothing and footwear, 12.9% for house rent, construction materials, water and fuel and power, 21.1% for furniture, Source: Central Statistics Agency furnishings, household equipment and operation, 15.2% for medical care and health, 16.4% for transport and communication, 31.8% for recreation, entertainment and education, 26.7% for personal care effects and 9.2% for miscellaneous goods. In the recent months, except for cereals, almost all the other food components have shown a rise in their indices. Specially, the index of pulses, oils and fats and milk, cheese and eggs has relatively showed a rising trend. The indices of vegetables and fruits (especially onions and garlic), spices and potatoes, tubers and stems For further questions or comments please contact [email protected] OR [email protected]

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ETHIOPIA MONTHLY MARKET WATCH

November 2010

have shown a relatively continuous rise in the past few months but showed a decreasing trend in November 2010(see Figure 1). If the decline in the indices of these items continue in the coming months, it will be advantageous to the net purchasers. B. Major Cereals Import Parity and Local Prices Compared to October 2010, the import parity and local prices of maize, wheat and sorghum at Addis Ababa remained stable in November 2010. However, the import parity prices of these commodities stood above November 2009 and May 2010 level whilst the local prices at Addis Ababa stood below the same comparison periods. The local prices of maize, wheat and sorghum stood below the import parity prices; 60% for maize, 37% for wheat and 12% for sorghum. These situations attributed to the devaluation of local currency and the good meher harvest of the main harvesting season. In November 2010, the import parity prices of cereals at Addis Ababa stood; at US$ 471/mt for maize, at US$ 494/mt for wheat and at US$ 422/mt for sorghum (see Table 1). C. Cereal Wholesale Prices in Large Urban Markets In November 2010, the average wholesale nominal Figure 2: Trends of wholesale prices prices of maize in major urban markets continued to decline by about 3% whilst for wheat increased by the same percent and stable for sorghum as compared to October 2010. With the exception of maize, average prices of wheat and sorghum in the month stood above the long term average by 12% and 23% respectively. It is not unusual at this time of the year that prices of cereals declined or remained stable. The lowest price of maize in November was observed at Nekempt that stood at Birr 1.63/kg followed by Jimma that stood at Birr Source: Ethiopian Grain Trade Enterprise 1.84/kg. The prices of maize stood below Birr 2.50/kg in 17 monitored markets where the highest prices was observed in Dire Dawa that stood at Birr 3.10/kg. The average wholesale prices in November 2010 were; Birr 2.28/kg for maize, Birr 4.54/kg for wheat and Birr 5.13/kg for sorghum (see Figure 2 and Table 1). D. Cereal Retail Prices in District Markets

The retail prices of major cereals (maize, wheat and sorghum) in most of monitored markets have increased by over 5% against October 2010, particularly in historically food deficit area markets. These increases of cereal prices were observed in markets of Babile,Yabelo, Gode, Jijiga, Meskan and Sodo for maize; Jijiga and Ajibar for wheat; Guradamole, Merti, Jijiga and Karati for sorghum (see Table 1). However, a little bit above 5% price decreases was observed in; Hosaena, Kobo and Assayita markets for maize; Kersa and Assayita markets for wheat (see Table 1). E. Supply to Markets Generally, the supply of cereals in historically food deficit area markets was below average attributed to slight increases in prices of maize, wheat and sorghum. However, in surplus producing areas markets the prices were remained stable or declined. On the other hand, the supply of vegetables particularly onion, garlic and tomato have improved that lead to moderate decline in their prices compared to the past few months. For further questions or comments please contact [email protected] OR [email protected]

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ETHIOPIA MONTHLY MARKET WATCH

November 2010

F. Terms of Trade: a. TOT for shoat to cereals Figure 3: Terms of Trade (Quintals/shoat) Compared to October 2010, the prices of shoat in monitored markets of Gode dropped by about 8% whilst rose at Jijiga and Dire Dawa by about 17% and 7% respectively in November 2010. Furthermore, rises in prices of cereals at Gode contributed to the further deterioration of terms of trade. As a result, terms of trade at Gode has deteriorated by about 17% with maize. However, at Dire Dawa market the TOT has improved by more than 5% with maize and wheat owing stable prices of cereals and an increase in shoat prices (see Figure 3 and Table 1). b. TOT for wage labour to cereals

a: Trends of shoat to cereal TOT

Source: WFP Sub Offices

The average daily nominal wage rate remained stable in Somali and Amhara monitored markets that stood respectively at Birr 40/day and Birr 30/day. Compared to October 2009, the terms of trade with wheat and maize in Somali region has dropped by 8% and 21% respectively as these commodity prices rose up. The terms of trade with maize in Amhara rose by about 5% whilst with wheat declined by about 5%. In November 2010, the TOT stood; at 9.1 kg/day with maize and at 8kg/day with wheat in Somali region; at 11.6kg/day for maize and at 6.2kg/day with wheat in Amhara region (see Table 1). G. Markets Price Forecast The monthly wholesale price forecast of maize at Mekele and wheat at Hosaena remains stable whilst sorghum at Gonder expected to rise by about 7% in December 2010. In January 2011, the price stability of these cereals in those markets prevails with exception of maize at Mekele that may rise by about 8%. The retail prices of wheat at Kersa remains stable in the coming two months; maize at Babile decreases by about 11% and at Jijiga rises by 17% in December and remains stable in January 2011 (see Figure 4 and Table 1). Figure 4: Price forecast of food commodities (Birr/100kg) a: Wholesale prices

b: Retail prices

Source: Ethiopian Grain Trade Enterprise

Source: WFP Sub Offices

For further questions or comments please contact [email protected] OR [email protected]

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ETHIOPIA MONTHLY MARKET WATCH

November 2010

For further questions or comments please contact [email protected] OR [email protected]

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