Somalia

Somalia Market Update: February 2021 UpDate (Issued March 31, 2021)

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Situation Report
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Highlights

Inflation: Somali Shilling (SoSh)-using areas: Consumer Price Index (CPI) increased in northeast regions (2%) and central regions (5%), while it declined slightly (1%) in southern regions in February 2021 compared to January 2021. Compared to the five-year average for February (2016-2020), CPI increased in central (9%), southern (10%) and northeast (24%) regions due to higher prices of sorghum (the main local cereal used in the calculation of CPI) and increases in the prices of imported foods this year.

Somaliland Shilling (SISh)-using areas: CPI declined mildly (3%) in February 2021 compared to January 2021 but remained stable compared to the five-year average for February (2016-2020).

Exchange rate: SoSh-using areas: Exchange rates between the SoSh and the United States Dollar (USD) remained relatively stable in most southern regions of Somalia but increased (6%) in northeast region while declining mildly (3%) in central regions in February 2021 compared to January 2021. Compared to the five-year average, SoSh depreciated at moderate rates (9-21%) in southern and central regions substantially in the northeast region (48%). The substantial depreciation of SoSh in the northeast compare to the five-year average is due to the continued circulation of locally printed SoSh currency notes in recent years in these markets.

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

Local cereal (white maize, red sorghum and white sorghum): Local cereal prices mostly exhibited mild to moderate (1-14%) increases in most regions of the country in February 2021 compared to January. The increases can be attributed to reduced supply as a result of the below average 2020 Deyr season cereal harvest and concerns about ongoing drought conditions in many parts of the country. Similarly, compared to the five-year average (2016-2020), February local cereal prices are moderately higher (9-38%) in most regions due reduced supply as a result of below average harvests in 2020 (both Gu and Deyr season).

Prices of imported food (rice, sugar, vegetable oil, wheat flour) exhibited mild (≤ ±10 %) changes (mostly increases in local currency terms) in February 2021 for most food imports compared to January 2021 across most regions of Somalia. Compared to the five-year average for February (2016-2020), prices of imported food items exhibited moderate (12-23%) to significant (28-45%) increases across most regions of Somalia and for most food imports. This is partly due to the depreciation of the local currency this year.

Livestock (local quality goat and camel) prices either remained relatively stable or changed at mild rates (≤ ±10 %) in most regions across the country. Compared to the five-year average, livestock prices were higher across all regions of Somalia with the highest increase (70%) recorded in northeast region due to loss of purchasing value of the local currency this year.

Camel and cattle milk prices mostly decreased at mild rates (1-10 %) across most regions. Compared to the five-year average for February (2012-2016), milk prices mostly exhibited mild/moderate to significant increases (1-35%) across most markets of Somalia, except in the northern regions where prices were lower compared to the five-year average.
Labour (unskilled) wages exhibited mild to moderate increases in February 2021 in most southern regions: Hiran (2%), Banadir (4%), Bay (7%), central (8%) and Bakool (9%)). However, labor wages were lower in Shabelle (4%), Juba (7%), and Gedo (14%) regions during February 2021.

Compared to the five-year average, labor wages exhibited mild to moderate increases (4-29%) in most southern and central regions attributable to relative improvement in employment opportunities as a result of increased political activities this year. The exception was in Gedo and Juba Valley where wage rates declined mildly (1-5%). Labour wages increased mildly (3%) in northeast regions compared to January 2021 but remained stable in northwest regions. Compared to the five-year average for 2016-2020, the labour wages were moderately higher (17-43%) in both northeast and northwest regions.

Terms of Trade (ToT) between daily labour wage and cereals either remained stable or changed by 1kg/daily wage across all regions except in Lower Juba and Middle Shabelle where ToT declined by 2-4kg/daily wage following increases in cereal prices and/or decreases in daily labour wage in February 2021 compared to January 2021. In Bay region, ToT increased by 2kg/daily wage due to increase in daily labor wage rate and decreased sorghum prices.
Similarly, compared to the five-year average for February (2016-2020), ToT between daily labor and cereals changed mildly (by ±1-2kg/daily wage) in most regions of the country. Exceptions are Gedo, Hiraan and Sool where ToT declined by 3kg/daily wage.

ToT between local quality goat and cereal prices was lower across most central, northern and southern regions in February 2021 compared to January 2021 attributable to lower goat prices in these regions. However, TOT was higher (6%) in Sorghum Belt regions due to higher goat prices in these regions in February.

Compared to the five- year average for February (2016-2020), the ToT between local quality goat and cereals was lower in the Sorghum Belt regions:
Bay (1%), Gedo (8%) and Hiran (32%)) as well as in Juba (8%), Shabelle (11%) and Banadir (20%), attributable to higher cereal prices this year. TOT was higher in northeast (1%), northwest (2%), Bakool (6%) and central (24%) regions compare to the five-year average.

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