Commodity prices between the decline of the dollar and the liberalization...

Commodity prices between the decline of the dollar and the liberalization...
Commodity prices between the decline of the dollar and the liberalization...
Eva Abi Haider

There is no doubt that the formation of the government created an element of reassurance, despite all the challenges facing the Lebanese citizen. This was reflected in a decline in the exchange rate in the parallel market from 19,000 to about 16,000. Does this decline reflect a drop in commodity prices, or are there other factors that may prevent it?

The fate of commodity prices fluctuates between the factors of the decline in the exchange rate in the parallel market by 3000 pounds on the one hand, and the reflection of the liberalization of diesel prices on the other hand, which is a key factor in production, industry and trade, and which was set at the unsubsidized price of $540, which is double what it was Previously. So, who will lean more? Will commodity prices fall or stabilize?

The head of the Supermarket Owners Syndicate, Nabil Fahd, confirms that commodity prices have actually declined, affected by the decline in the price of the dollar. He attributed the overcoming of the decline as a result of the decline in the price of the dollar to the factor of the rise in fuel prices, because the dollar declined within a short period of two days, but the reflection of the rise in fuel prices on the pricing of commodities comes successively and over a longer period of time, that is, gradually and not once.

He stressed that, as of last Saturday, some supplier companies have taken the initiative to adopt new, reduced prices for goods. With a simple comparison of the prices of commodities today with the prices of last week, there is no doubt that there is a decline ranging between 5 to 15%, especially the grains that are priced in dollars, as well as some types of washing powders declined, but in varying proportions that vary between one supplier and another and one brand and another. Fahd pointed out that all prices are ultimately subject to the competition factor, which is the main player in setting prices, so no supplier or dealer can maintain its price level, while its competitor reduced it, in order to preserve its customers. Therefore, all traders are forced to walk at the price level imposed by the market.

Concerning the rate of purchase of goods, Fahd says, it has decreased a lot as a result of the weak purchasing power of citizens after the decline in income, so the consumer can no longer buy everything he needs, which led to a decline in sales in shops and supermarkets alike. He estimates that the volume of dollar-denominated sales will decline between 2018 and 2021 by 80%.

In addition, the aggravation of the gasoline crisis and its interruption prevented shopping from supermarkets, especially since most of them are located on the main roads, and therefore those who go to them need a car to shop, without forgetting that the majority of these supermarkets used to extend queues of cars in front of them.

Fahd hoped that the next government would work on a new economic and financial plan with the IMF, bringing with it financial flows that would create a balance in the market and reflect an improvement in the exchange market, through which the citizen would be able to regain some of his purchasing power to create a balance between incomes and purchases.

I get

For his part, the head of the Syndicate of Food Importers, Hani Bohsali, says that there is no doubt that the formation of the government gives a positive atmosphere in the country, and this was demonstrated through the noticeable decline in the exchange rate. He added: “We are looking forward positively to the government’s work, and we are counting on it to start the desired reforms and adopt solutions to the accumulated crises, directly negotiating with the International Monetary Fund and opening up to the world, which would reflect further decline in the exchange rate.”

Bohsali explained to Al-Gomhoria, “The exchange rate is no longer the only factor in the decline and rise in prices. There are several factors that entered the line, and a thousand accounts are now being reckoned with. In fact, the reality is very painful. The commercial sector is bleeding and companies are suffocating. It is true that diesel is now available to the private sector, but gasoline is cut off. How can we conduct our business and transport goods to stores, supermarkets, and stations, most of which are closed?

Bohsali enumerated the factors that enter into the pricing of the commodity besides the price of the dollar, most notably:

– The increase in the price of fuel, double and non-existent.

– The increase in the cost of transportation allowance for employees from 8000 liras previously to 24,000, knowing that this amount is hardly enough for the price of a petrol tank per month.

– The majority of the private sector has raised wages to employees as cost-of-living advances, pending any official wage hike, in order to preserve the Lebanese workforce.

Rise in rents, transportation difference, and inflation in maintenance and spare parts prices.

– The increase in the cost of global shipping on a 20-foot container from $1,200 to $8,000 and 40 feet to $16,000 in a historical precedent.

In addition to all these factors, the work of public administrations is disrupted and transactions take several days in the ministries before they are completed, so that the Lebanese state has become one of the factors causing the rise in prices, because this delay is reflected in a delay in clearing the goods, so the merchant pays rent for each additional day to the shipping company, which results in thousands Fresh dollars.

Accordingly, Bohsali says, pricing is no longer limited to the rise in dollar prices in the parallel market, and therefore it is very difficult to determine the rates of decline or increase in prices, noting that the merchant no longer has the luxury of increasing prices, due to competition on the one hand and the decline in the purchasing power of citizens from On the other hand.

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I have been an independent financial adviser for over 11 years in the city and in recent years turned my experience in finance and passion for journalism into a full time role. I perform analysis of Companies and publicize valuable information for shareholder community. Address: 2077 Sharon Lane Mishawaka, IN 46544, USA Phone: (+1) 574-255-1083 Email: [email protected]