Tuesday, March 5, 2024
BusinessLooming inflation dims holiday season, consumers’ confidence takes a back seat

Looming inflation dims holiday season, consumers’ confidence takes a back seat

It has been a while since inflation begun to take its toll on consumers’ daily life, crippling their ability to frequent the markets of their choice, for their choice of products. The confidence Dejene Melka had about three years ago taken a hard knock in the last couple of holidays on his visits to the livestock markets.

Dejene sources his income as a ride-hailing service provider to raise his three kids and assist his parents. And having larger families, Dejene and his three friends developed a habit of buying an ox for the holidays and sharing it among themselves, commonly known as Kircha, for the last five years.

The last few holidays, however, has been hard for them, due to the drastic increase of the price of livestock. When they started organizing kirchas, each of them used to contribute about 2,500 birr to buy an ox for around 10,000 birr.

Not able to increase the amount of money they chip-in as time went by, the quartet begun to implement the shrinkflation strategy, that is to buy a smaller size of ox at the same amount for a few holidays that followed.

“It has been a few years since we began to increase the money as we were not able to buy even a calf at 10,000 birr,” Dejene said adding, “Last year, we contributed about 5,000 birr each and we managed to buy a very small ox that barely had sufficient meet at 19,000 birr.”

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Had they wanted to buy the same size of ox they had purchased five years ago, even a contribution of 15,000 birr from each, might not be enough.

Driving his corolla sedan around Kera roundabout, which is under construction, Dejene checked the livestock market for current prices of an ox, contemplating how much money he will need to collect from his friends later. They plan to contribute 7,000 birr each for this holiday.

“If we don’t have any hope, we will have to abort this plan and buy a sheep or nothing,” Dejene said looking puzzled about the state of affairs.

The Kera livestock market has been providing city residents a cattle market with an array of cattle breeds. The market has been setting record prices for the past few holidays, with the last Christmas holiday registering a 160,000 birr sale for an ox from Harar.

Cattle from Harar are believed to be the best among the different breeds of cattle in the Kera market, which also includes livestock from Jeru, 226km north of Addis Ababa in North Shewa. The market also sees livestock from as far as Bahir Dar, Gondar and Borena. However, there are no cattle brought from Borena for several months now due to a severe drought ravaging the region.

According to Simeneh Balcha, manager of the marketplace, an ox is already being sold for the record price set during the last holiday, while a calf fetches over 30,000 birr.

“I am sure the record will be broken during the last few days of the holiday week,” Simeneh said.

The high price set for livestock is not different for the sheep and goat market as well. The sheep market for Kera, across the road from the ox market, also has varieties of sheep coming from Jimma, Wolaita, Ginchi, and Jeru.

The lowest price of sheep, which is small in size, is going for over 3,000 birr, while a bigger size fetches over 15,000 birr.

But for consumers, with Easter and Ramadan coming a few weeks apart, the market is not enjoyable at all.  

Jemil Mohammed, a sheep broker at the Kera market, is not sure how many he can sell to buy a good sheep for Ramadan. The ones he gets his hands on usually go for about a 10,000 birr.

“In the previous holidays, I would have already saved some money, enough to buy one for myself for Ramadan, but business has fallen and prices increased. My savings will only get me a chicken now,” said Jemil adding, “It is indeed, a very difficult holiday season for all of us.”

Last week, the Ministry of Trade and Regional Integration announced the average price of livestock that were being sold in local markets with three levels; first, second and third. The first level mixed breed ox was being sold for 76,000 birr, while that of the Harari breed was being sold 70,000 Birr on average.

An average price of a mixed breed sheep in the first level were sold between 15,000 and 17,000 birr, while that of the Arsi was being sold between 7,500 and 9,500 birr. A first level mixed breed goat was being sold between 9,000 and 12,000 birr on average, all depending on the market places.

It has been a little while since the holidays started to become a stressful period for consumers like Dejene.

The city administration’s initiative to begin Sunday markets in Addis Ababa had brought respite to consumers at some point. Favored by the community, the administration stretched the market’s reachability, placing them at 50 locations, compared to the five places they kicked-off the program with.

The Addis Ababa Trade Bureau has facilitated for traders to bring their commodities to consumers for the Sunday market since last week, with the main goal being to be provide relief from the rising cost of commodities or avoiding scarcity.

For experts like Getachew Asfaw, a retired economist who had previously served at the former Planning & Development Commission and the Ministry of Finance, the government’s initiative to engage the markets is never satisfactory and is like a teardrop to an ocean of problems. 

“With over 110 million people in the country, most belonging to the two religions, Islam and Christian, about to break their fasting season. The commodity supply by the government and market control can never be enough for all these people,” said Getachew.

Engaging in such initiatives, officials at the Addis Ababa Trade Bureau have high hopes to help ease the soaring prices and adjust supply shortages. Last week, Adem Nuri, head of the Bureau, announced that his office is dedicated to supply the commodities.

The Bureau said it had prepared quotas and would provide 1.5 million liters of edible oil, 120,000 quintal of sugar and 25,500 quintal of wheat flour to distribute through Cooperatives. It also announced it had availed up to 40,000 livestock to individual traders to supply to the community.

Muzemil Temam leads Beza Cooperative in Kolfe Keranyo District. He sells his commodities around Tor Hayloch along with several other cooperatives. Having witnessed his customers’ budgets squeezed over the last few holidays, he thinks this one is particularly difficult.

“There is no question that this holiday is the worst,” Muzemil said.

Muzemil’s Cooperative was selling a kilogram of onion for 29 birr just a week before, but has now increased to 38 birr. His suppliers from Meki increased their prices in time for the holiday.

The same kilogram of onion is being sold as high as 40 birr in markets like Shola, a 35 percent increase from the price during last Christmas.

A couple of months ago, a dramatic increase in the price of edible oil saw the five liter of oil being sold for 600 birr. Following the impact of the war between Russia and Ukraine however, it further went up to 1,000 birr.

Beza Cooperative is selling the five liter of edible oil at nearly 900 birr.

The market at Shola also shows signs of distress among consumers and merchants. The soaring prices of holiday commodities such as butter, chicken and onion is forcing everyday folk to choose on certain items, quantity or even skip celebrating at some point.

“Buying butter is now a luxury. I will have to skip it for this holiday,” said Askale, a consumer who wants to go by her first name only. She was visiting a shop belonging to Birhanu Yadet, who sells eggs, honey and various milk products.

What Askale had in mind was to spend 500 birr for a kilogram of butter, known as Lega, since that was the price she paid for the same item during Christmas. The price now increased to 800 birr.

Birhanu is also afraid that he might not sell all of his stock.

A larger sized chicken from Wolaita is now being sold as high as 900 birr, while smaller sized chickens fetch as high as 500 birr.

For about a year now, inflation has been growing in a pace rarely seen previously. The food inflation for the month of March was 43.4 percent, a little over from the preceding month. The headline inflation stood at 34.7 percent.

The report by the Central Statistics Service blamed the international crisis and an increasing cost of sea transportation. Several European countries and the US have recorded high inflation.

Last month alone, Spain recorded 9.8 percent inflation, while Belgium’s stood at 8.3 percent and Germany at 7.3 percent.

Getachew believes the government is becoming unable to lead the macro and microeconomics of the country as a whole.

“In addition to the government’s inability to manage the macroeconomics, producers on a microeconomic level aren’t producing wisely as well, while traders and consumers aren’t working to the level that they should,” Getachew said.

For him, the economic problem in Ethiopia is in all levels including the government, producers, traders and consumers, and unless the government actively engages in reform initiatives and takes massive strides, he fears the situation would get worse.

“The current inflation problem is just starting now. It is just the sign of an impending storm,” warned Getachew.  

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Video from Enat Bank Youtube Channel.

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