Sierra Leone reduces Headline Inflation to 31.93%…but purchasing power depreciates due to stagnation in minimum wage

AYV News, August 19, 2024

Sierra Leone’s Headline Inflation has reduced from 47.42 percent in January 2024 to 31.93 percent in June 2024, whiles Food Inflation has also improved and came down from 49.82 percent in January to 27.0 percent in June 2024.

This is according to the just-released World Food Programme (WFP) Quarterly Sierra Leone Market Prices Bulletin, which further states that the purchasing power of the average Sierra Leonean continued to depreciate due to increase in prices of key staples and stagnation in minimum wage rates/daily wage labour.

The Bulletin provides updates on its economic outlook, price changes for staple food commodities; terms of trade between wages of unskilled labour and main staple food commodities as well as exchanges rates (USD/SLE).

The Research, Assessment and Monitoring (RAM) unit of the United Nations World Food Programme (WFP) in Sierra Leone, in collaboration with the Ministry of Agriculture and Food Security (MAFS) collected monthly information on 29 food commodities and daily wage rate of manual labour in 60 markets across all 16 districts in Sierra Leone to complete the Bulletin.

The WFP said as of June 2024, a monthly minimum labour wage purchased around 34 kg of imported rice compared to 44 kg during the same period in 2023.

It further reported that the leones has been relatively stable since the last quarter of 2023 (October-December 2023) to date. Comparing the year-on-year depreciation of the Leones against the United States Dollar it stands at 8 percent in June 2024.

It said the prices of a kilogram of imported and local rice increased by 15 percent and 13 percent respectively when compared to the previous quarter (January-March 2024) and increased by 30 percent and 22 percent respectively year on year.

On Economic Outlook, the WFP said the second quarter of 2024 shows a stable macroeconomic performance when compared to the previous quarter due to a reduction in inflation rates and a steady exchange rates trend, adding that although this quarter shows an improvement when compared to the previous quarter, inflation remains high, affecting both food and non-food items, largely due to continued rising commodity prices and a heavy reliance on imports.

“The year-on-year headline inflation stood at 31.93 percent in June 2024, reduced by 16.03 percentage point from 47.42 percent in January 2024, during the same period the food inflation decreased from 49.82 percent in January 2024 to 27.0 percent in June 20241.

“This constant price increase of food commodities is making it increasingly difficult for households to afford sufficient and nutritious food. Several factors are contributing to this issue such as the abolition of the rice subsidy, barriers to regional trade (taxes, and bans on grain exports), rising transport costs, currency depreciation and the global market impact of the ongoing Russia Ukraine war”.

The WFP said the impact of high inflationary trends is reflected on food security levels in the country in which one in five Sierra Leoneans are severely food insecure 2024, adding that the annual depreciation of the leone against the United States dollar stood at 8 percent from SLE 21 in June 2023 to SLE22.6 in June 2024.

In the area of Food Commodity Prices, the WFP said: “Food prices during this quarter remained a challenge for most Sierra Leoneans, recording an increase of 15 percent and 13 percent for local rice and imported rice respectively when compared with the previous quarter (January-March 2024). The national average prices of both local and imported rice in Sierra Leone increased by 30 percent and 22 percent, respectively between June 2023 and June 2024.

“Notably, the highest price increase for imported rice were observed in Port Loko, and Kambia districts, where the price per kilogram of imported rice soared to SLE24 in June 2024, marking a 50 percent increase. The increase in the price of imported rice is due to high freight cost and the abolition of the rice subsidy that took effect in March 2024. This has caused the price of imported rice, which has always been lower than local rice, to be about the same since the beginning of the year”.

On Inflation, the WFP Bulletin reported that the national inflation of food and non-food items have shown a significant improvement during the last quarter of 2024, adding that the general inflation stood at 31.93 percent in June 2024 with a decrease of 16.03 percentage point from 47.42 percent in January 2024.

The Bulletin further reported that the food and non-alcoholic beverages inflation rates have been reducing steadily since the first quarter of 2024 and that the national food and beverages inflation for June 2024 was 27.0 percent, down by 22.82 percentage points from 49.82 in January 2024.