Somalia

Somalia Market Update: April 2021 Update (Issued May 31, 2021)

Format
Situation Report
Source
Posted
Originally published

Highlights

Inflation: Somali Shilling (SOS)-using areas: Consumer Price Index (CPI) increased (by 2-7%) in April 2021 across all regions of Somalia compared to March 2021 due to increases in sorghum prices. Similarly, compared to the five-year average for April (2016-2020), CPI increased (12-29%) across all regions of Somalia due to higher prices of sorghum (the main local cereal used in the calculation of CPI) and increases in imported food prices this year.

Somaliland Shilling (SLS)-using areas: CPI remained relatively stable in April 2021 compared to both March 2021 and five-year average for April (2016-2020).

Exchange rate: SOS-using areas: Exchange rates between the SOS and the United States Dollar (USD) remained relatively stable in most regions of Somalia in April 2021 compared to March 2021. Compared to the five-year average, SOS depreciated at moderate rates (8-14%) in central and southern regions of the country. However, depreciation against the USD was higher in northeast regions (40%) due to continued circulation of large amount of locally printed SOS currency notes in these markets in recent years.

SLS-using areas: the exchange rate between the SLS and the USD exhibited relative stability in April 2021 compared to both March 2021 and the five-year average for April (2016-2020).

Local cereal (white maize, red sorghum and white sorghum): Local cereal prices mostly exhibited increasing trends (2-12%) in most regions of the country in April 2021 compared to March 2021. These increases can be attributed to reduced market supply because of low carryover stock from previous harvest and concerns over crop harvest prospects for the current Gu season. Similarly, compared to the five-year average for April (2016- 2020), local cereal prices in April were significantly higher (8-42%) in most regions due to reduced supply this year.

Prices of imported food items (rice, sugar, vegetable oil, wheat flour) exhibited mild (≤ ±10%) changes, mostly increases in local currency terms, in April 2021 compared to March 2021 across most regions of Somalia. Compared to the five-year average, prices of most food imports were higher (3-29%) in most regions of Somalia. Price increases were much higher (42-64%) in northeast markets, partly due to depreciation of the local SOS currency this year against the USD.
Livestock (local quality goat and camel) prices mostly increased at mild to moderate rates (≤ ±15%) in most regions across the country in April 202, consistent with seasonal trends. Compared to the five-year average, livestock prices were higher (8-26%) in most regions of Somalia. The highest increase were higher (44-70%) in northeast regions due to loss of purchasing value of the local currency this year.

Milk prices (camel and cattle) mostly increased (5-20%) in most regions of the country due to reduced milk availability caused by drought conditions. Compared to the five-year average for April (2016-2020), milk prices mostly exhibited increases (4-30%) across most markets of Somalia except in northern regions where prices either remained relatively stable or declined due to increased supply from commercial dairy farms in recent years.

Labour (unskilled) wages remained relatively stable in northern and central regions but mostly increased at mild rates (≤10%) in most southern regions and at moderate rates (30%) in the Shabelle Valley in April 2021 compared to March 2021 due to increased agricultural employment opportunities in the region linked to the start of Gu season agricultural activities. Compared to the five-year average, labor wages are higher in most regions of the country due to relatively improved employment opportunities this year.

Terms of Trade (ToT) between daily labour wage and cereals either remained stable or changed by 1kg/daily wage across all regions in April 2021 compared to March 2021, except in the Shabelle Valley where ToT increased by 3kg/daily wage due to increases in daily labor wage and slight decrease in white maize prices. Compared to the five-year average for April (2016-2020), ToT between daily labor and cereals mostly declined by 1-3kgs in most regions of the country due to increases in cereal prices this year.
ToT between local quality goat and cereal prices was higher in April 2021 compared to March 2021 across most regions of the country attributable to increased goat prices. Exceptions are central regions (3%) and the Sorghum Belt (6%) where ToT declined. Compared to the five-year average for April (2016-2020), the ToT between local quality goat and cereals was lower in Sorghum Belt (19%), Juba Valley (17%) and Banadir (12%) attributable to higher cereal prices and/or lower goat local quality prices this year. TOT was higher in northeast (2%), central (3%) and northwest (15%) regions compared to the five-year average attributable to higher goat prices this year.