Sierra Leone | Quarter 2, 2023
- The Leone (SLe) continued to depreciate against the United States Dollar (USD) by 60 percent compared with June 2022 to June 2023. Sierra Leone is among countries in West Africa showing of the highest depreciation of the domestic currency against foreign currencies.
- The national headline inflation reached 44.8 percent and food inflation rose to 58 percent in June 2023.
- The prices of a kilogram of imported and local rice both increased by 14 percent compared with the previous quarter and increased by 53 percent and 39 percent respectively year on year.
- The purchasing power of the average Sierra Leoneans continued to depreciate due to increase in prices of key staples. A daily labour wage could purchase 2kg of imported rice compared to 2.2kg during the same period last year.
Sierra Leone economy continues to suffer from high inflation rates largely stemming from depreciation of the national currency. The year-on-year headline inflation stood at 44.8 percent in June 2023 with an increase of 0.38 percentage point from 44.43 percent in May 2023, during the same period the food inflation increased from 55.7 percent in May 2023 to 57.9 percent in June 2023 1. Continuous inflation is challenging households’ ability to access sufficient nutritious food. The continuation of barriers to regional trade (illegal levies, taxes, and bans on grain exports); rising transport costs; currency depreciation and the impact of the Russia Ukraine war on market volatility in global markets are major elements behind increases in prices in local markets. According to FAO, because of the inflationary pressures, prices of the main cereals are 25 percent to 40 percent higher than the average of the last five years, with peaks in Ghana (100 percent), Sierra Leone (100 percent), Burkina Faso (50 percent), and Nigeria (50 percent)2. The impact of high inflationary trends is reflected on food security levels in the country in which 78 percent of Sierra Leoneans are food insecure, including one in five (20 percent) severely food insecure and 80 percent unable to afford a healthy diet according to results from Food Security Monitoring Survey conducted by Ministry of Agriculture and WFP in February 2023 .
The annual depreciation of the Leone against the United States Dollar stood at 60 percent from SLe13.1 in June 2022 to SLe21.0 in June 2023, however, the country witnesses a slight appreciation of the national currency when compared to the previous month from SLe22.7 in May 2023 to SLe21.0 in June 2023.
- Stats SL – CPI (statistics.sl) WAMZ Exchange Rates (bsl.gov.sl)
- Food Security Update (June 5, 2023) – World | ReliefWeb
Food Commodity Prices
The price of local and imported rice increased nationally by 39 percent and 53percent respectively, from June 2022 to June 2023. The prices of both local rice and imported rice increased by 14 percent nationally when compared to the previous quarter. The highest increment for imported rice were recorded in Bo, Pujehun, Bombali, Tonkolili and Kailahun district (67 percent) in which the price of a kilogram of imported rice reached Le 20 in June 2023. The increase in the price of imported rice is due to high freight cost and depreciation of the national currency when compared to the United State Dollar.
Cassava and its processed products such as gari and foofoo the second most common staple food are in high demand when the price of rice is increasing. Overall, the prices of both cassava and gari skyrocketed by 91 percent and 321 percent respectively year on year, depicting high demand for the products within the period. The cost of one kg Gari and imported rice were the same.
The average price of a kilogram of palm oil and vegetable oil in June 2023 shows an increase of 58.5 percent and 32.2 percent respectively when compared to June 2022, however, within the second quarter of 2023 the price of palm oil decreases by 20 percent when compared to the first quarter of 2023 in line with previous seasonal trends. At district level the annual price increase of palm oil was predominant in the following districts Kambia (80 percent), Kono (66.7 percent), Port Loko, Bo and Bombali (63.6 percent).
Purchasing power of Unskilled Wage worker
Figure 4 depicts the Terms of Trade (ToT) of daily wages of unskilled workers to the main Sierra Leonean staple food items. The ToT compares the amount of commodity that an unskilled wage worker can exchange with their daily wage labour. The ToT for imported and local rice shows a diminishing trend (a worker gets less rice for a day’s worth of labour) when compared from June 2022 to June 2023, the main reason for the year-on-year decrease is due to the increase in price of both imported and local rice against stagnant wages. From figure 1 above 2.2 kilograms of imported rice was exchanged for the daily wages of unskilled workers in June 2022, falling to 1.9 kilograms in June 2023, similar reduction is shown for local rice from 2.0 kg in June 2022 to 1.8 kg in June 2023.This has further increased the economic vulnerability of most Sierra Leoneans and has reduced their purchasing power to meet their basic food needs.
Currency Exchange Rates
According to the Bank of Sierra Leone, the Leone (SLe) depreciated by 60 percent year on year against the United States Dollar, as depicted in figure 5. The main factor causing depreciation is the increase in the price of imported goods due to global inflationary trends. Considering Sierra Leone depends largely on other countries for international trade to meets the essential needs of her citizens the continues depreciation of the local currency will eventually worsen the preexisting vulnerability and food insecurity.
The national inflation of food and non-food items stood at 44.8 percent in June 2023 with an increase of 0.38 percentage point from 44.43 percent in May 2023.The food and nonalcoholic beverages inflation rates continue to increase over time. The national food and beverages inflation for June 2023 is 57.9 percent, up by 2.18 percentage points from 55.81 percent in May 2023. Sierra Leone is among countries with high food and nonfood inflation in the subregion due to increases in commodity prices and reliance on imports. The inflationary pressure has worsened the economic vulnerability of most Sierra Leoneans and has negatively impacted their overall food insecurity.
RETAIL PRICES OF FOOD COMMODITIES
The volatility in global food and commodity prices continue to undermine economic stability and food security of most countries in the world, although the global food prices are decreasing most developing countries still faces high food prices due to persistent increase in local prices because of supply chain distortion coupled with depreciation of local currencies and persistent rise in inflation. Sierra Leone is among countries that have been significantly affected by this trend.
The table below gives a snapshot of the current prices in Leone and United States Dollar of key staples across the country and shows the change in prices when compared to the average of the preceding month, three months average change to the current, six months average change to the current month and annual average change to current month. The table also shows the change direction of prices in which a change greater than 5 percent is regarded as increase, less than 5 percent is normal and below zero is a decrease.
 WFP Food Security Monitoring Survey Report February 2023