The rising price in the unit of products is becoming alarming in the part of the world where I stay.
Before we go on with this escalating price I will love to say a big thank you to the Leofinance community for bringing it closer to people just as it's stated in the post-everything is related to finance but it can only be related if the right approach is used.
I have written some posts concerning finance but I seem not to get it right or maybe the right approach was not used.
My city is currently undergoing some challenges of a continuous rise in the price of products. I have to do some underground research. This was carried out by the questionnaire method.
I went on asking most of the traders why the increase in the price of what they sell and the answer I got from about 70% is that there is a high exchange rate in the dollar to our local currency. But then I asked the question how does a high exchange rate in the dollar to our local currency affect products that are locally produced. And there is no form of transaction between the two countries.
But something had to link the domestic products to the high exchange rate. Getting to the root of the matter I discovered there is one thing that can literally affect almost everything in the country and then leads to a rise in the price of most things in the country.
All this came as a result of an increase in the price of one product and that is "CRUDE OIL"
This particular product is the determinant of the price of all other products including foreign and domestic products.
Going through Google I discovered a small history of how this product rose in its exchange rate year after year.
The chart above tells how this product increases with time. But how does this affect the price of other products? It all balls down to means of transportation since this product is converted into the premium motor spirit(pms), petrol in other words this product is the major product use for transportation when the price of this product increases it goes down to affect the cost of transporting these products from where they are produced to the utility point. This automatically gives rise to these products.
This occurs because we export this product for refining and then buy it as a finished product for our consumption.
Example of product and how its price has risen over time.
A bag of rice from 2010 was sold at the cost of #7000(Naira)
As of 2015, it increased to #12,000(naira).
Then it came up to #15,000 which was around 2017, then it came up again to #19,000 currently a bag of rice is sold at the cost of #25,000.
Yet the standard of living keeps going down the drain as the money received as income doesn't meet the rising prices of goods and services in the country.
But then there is the solution to this perpetual rise in the price of commodities, and some of these solutions are;
Making refineries functional to process our crude oil and turn to finish product I believe will reduce the cost of exporting and importing this product and at a lower rate we will be able to refine it, if this is done I believe there will be a reduction in prices of goods and services.
Increase the standard of living by increasing the level of income directly proportional to the rise in the level of price of commodities. Do this and people will not feel the rise since their income can meet the rising price.
When these are met I believe we will have a better solution to the rising price of things.