Libya's markets are under pressure due to a sharp increase in the price of basic goods, particularly food and flour. The country's reliance on imports to meet its food needs has made it vulnerable to fluctuations in exchange rates and global prices. According to Jamal Awid, Deputy Head of the Price Stabilization Fund, prices of some goods have risen by around 40% recently, while flour prices are close to a 100% increase.
The rise in the dollar's value in the parallel market has directly affected the cost of importing goods, leading to higher prices for basic goods such as oils, rice, and grains. The Price Stabilization Fund continues to provide the same quantities of goods without increasing them, raising questions about the ability of current supplies to meet market needs and limit the impact of rising prices.
The price of flour has increased significantly, with a quintal of flour reaching 425 dinars in some areas, up from 275 dinars in August, a rise of 150 dinars. This increase poses significant challenges for bakeries in terms of operating and production costs, and there are concerns that the rise in flour prices will be passed on to consumers in the form of higher bread prices.
The increases in goods prices coincide with rising inflation rates, with the annual rate approaching 14% in October, up from around 9% in February. The inflation rate was recorded at 16.6% in September, reflecting growing pressure on living costs and a decline in household purchasing power.
The difference between the official and parallel exchange rates is over 55%, with the dollar trading at around 10 dinars in the parallel market and 6.42 dinars in the official market. This difference increases the cost of imported goods and deepens the gap between exchange rates and their impact on markets.
In an attempt to address the flour crisis and ensure its supply to bakeries, the Ministry of Economy announced the implementation of a direct sales mechanism for flour to bakeries, with the participation of five factories and companies. The aim is to reduce distribution channels and limit the involvement of middlemen.
The effectiveness of this mechanism will depend on its ability to provide the required quantities at reasonable prices and monitor distribution channels to prevent speculation and hoarding. However, the crisis of food prices is linked to more than just local distribution measures, as factors such as foreign exchange, reliance on imports, and global prices also play a role.
Key points
- Libya's markets are experiencing a wave of inflation, with prices of basic goods such as flour and food rising sharply.
- The country's reliance on imports has made it vulnerable to fluctuations in exchange rates and global prices.
- The rise in the dollar's value in the parallel market has directly affected the cost of importing goods, leading to higher prices for basic goods.
