Sanusi Research & Consulting: Sierra Leone Telegraph: 19 May 2021:
Since last month, we have been inundated with messages from the general public in Sierra Leone, urging us to comment on the Statistics Sierra Leone (Stats SL) Consumer Price Index (CPI) whose year-on-year inflation recorded, for the first time since June 2016, a single digit or 8.95% in March 2021, a 2.55% decline from 11.50% in January this year.
It is important to note that the CPI is a basket of several goods and services including food and non-alcoholic beverages. The prices of food and non-alcoholic beverages in the CPI declined by 4.14% in one month, from 19.59% in February 2021 to 15.45% in March 2021.
We have used both quantitative and qualitative methodology to study the trends of prices of food in Sierra Leone. Our findings suggest that food prices usually go up and rarely go down.
In our recent survey on the perception and opinion of food traders and consumers on trends of food prices, we covered over 300 participants residing in the capital city Freetown. Majority were consumers (70%) compared to traders (30%).
Only 1 in 10 respondents say they had experienced at least once decline in food prices since 2017. Consumers (95%) are more likely to say food prices usually go up and rarely go down compared to traders (90%).
Moreover, we observe that the price of a 50kg bag of rice, the most consumed staple in Sierra Leone, has increased by 75% in four years, from Le200,000 (about $20) in 2017 to Le350,000 (about $35) in 2021.
Furthermore, a Peak tin powered milk (400g) used to cost Le25,000 in 2017, is now sold at Le50,000, a 100% price inflation.
Sierra Leone usually suffers greatly from high food prices, especially during rainy seasons when prices of basic food commodities including the staple rice usually go through the roof in a country classed by the World Bank one of the poorest in the world.
According to the Ministry of Agriculture, Sierra Leone spent $350-400 million annually on food imports alone, despite 85% of the country’s 72,000 square kilometers of land is classed as arable.
Data from Bank of Sierra Leone shows that the value of the local currency, the Leone, depreciated by 4.30% in 2020.
According to a report we published in October last year on the cost and impact of the COVID-19 outbreak, a strong majority (83%) of respondents say they lost income to the Coronavirus outbreak; and nearly four in 10 Sierra Leoneans report they lost their jobs to the global pandemic.
Did the decrease in prices in March marked the beginning of economic recovery driven by sharp increase in supply or productivity or low inflation?
Did traders of food and non-alcoholic beverages in Sierra Leone lower their prices in March to boost demand and sell their surplus?
Did government subsidies help lower prices in March? Did the decrease in prices suggest that demand is low in the economy, or the mining sector being hardly hit by 2014 Ebola and current COVID-19 outbreak is unable to increase demand in other sectors such as construction, service, agriculture and manufacturing? What if existing data does not answer all these questions?
Author – Sanusi Research & Consulting, Freetown, Sierra Leone.