Basic products: the downturn’s generalized inflation

A plus 1.4% general inflation during January 2010 is almost a miracle compared to the country current misery. The national currency’s devaluation is all the way the pending downturn’s origin and consequence. The ariary is dealing resistance to the Euro being contained below 3000 points, but fails to match the US dollar for 2150 points. The US dollar’s revival has direct backlashes on home imports; fuel being on top of the chart.  

Following a plus 8% rise translated in 200 ariary per gas liter for consumers, the ministry in charge of Energy convinced the oil companies to remove the measure. Short term common ground has been found by halving the consumer price increase The “marketing” operation was a success for the government since consumers largely retained the minus 100 ariary drop instead of the subsequent increase of the same amount. Anyway, the 3000 ariary per liter psychological border is crossed. Gas is now costing 1 euro per litre in Madagascar. It is cheaper than anywhere else, is it? Balls! Minimum wages are actually nowhere else than here lower than 25 litres of gas.  

The fuel price increase was only a runner up to inflation recorded on grocery stores’ shelves. The international market’s evolution took its toll on the Malagasy local market. Rice, the most political of all basic products, is, for the time being still spared: only +2% on home grown product’s price, and +3% on that of imported commodities.  The international market’s price is being negotiated between 350 and 400  US dollars. The transitional HAT trade minister downsized the price increase’s gravity by rating it with the poor year 2009’s standards.  

Andry Rajoelina used to promise low rice prices subsequent to his led destruction of Magro’s monopoly on the imported products business. In one year, there has been an average of minus11% decrease. The makalioka, the local star rice variety, costs 1120 ariary per kilo against previously 1180. The typically “gasy” rice is being sold for 1090 Ariary per Kilo, that is to say the same price minus105 Ariary. The Trade ministry’s largest pride was the minus 7% decrease of imported rice prices up to 1030 ariary per kilo. It was, officially, the consequence of the transitional regime’s led liberalization. As a matter of fact, there has never ever been any monopoly on rice business, in spite of Magro’s dominating position  

This “liberalization” has been followed by subsequent decreases of food oil prices too. Consumers are certainly benefiting from the price; 4750 ariary to 2650 ariary in one year; but as so certainly suffer from lack of quality. Cheap but significantly poor food oil found it hard to conquer the market, even after all Tiko products had vanished from grocery stores’ shelves. The basic products related crisis has, since the beginning of the year 2010, only caused a general plus 5% increase. As the black ship of the family, flour did not follow the pattern, briskly skyrocketed before stabilizing, making in the end, a honourable score sheet of plus 9% in a month. The HAT liberalization make up is, however, a dead duck when it comes to address sugar. The restart of the Sirama corporation led national production is stillborn. In a couple of months, sugar prices increased by 36% up to 2700 ariary per kilogram. The promises of prices subsequently going down were the Place of May 13th’s insurgency’s main incentive.