Prices of consumer goods across Iraq have risen sharply in the past few days after news the Iraqi Dinar plunged when news about the government’s plans to devaluate the currency came out.
The Iraqi Dinar has been gradually losing value against the US dollar in the past 10 days. On Sunday, the price of the US dollar reached 1,450 against the Iraqi Dinar.
The price of one kilogram of sugar, for example, went up from 660 to 7870 Dinars, and the price of cooking oil has risen more than 30%.
Hasan Ali, who sells consumables in Kirkuk, told KirkukNow: “Everything has become more expensive; we buy the products in dollars, and the price of the dollar is now high, that’s why we sell our goods at a higher price than earlier.”
video: a shop owner in Kirkuk talks about the rise of prices
“The higher the price of dollar gets, the more expensive consumables become. And the people will pay the price for this spike,” Hasan said.
Abdulrazaq Ali, another shop owner in Kirkuk, said: “It’s not our fault; for example, before the rise of dollar valuta, I would sell a 6-kilogram container of cooking oil at 9,000 Dinars, today [19 December], I bought it for 10,500 Dinars from merchants. At what price am I supposed to sell it?”
A resident of Kirkuk, Shakhawan Khalid, said: “The problem is that some of the merchants who import consumables took advantage of this and immediately raised the price of the goods. What is currently being sold, was not bought in the past couple of days to be sold at higher prices; what’s being sold at the market now comes from their warehouses. They had previously bought it at lower prices.”
What is currently being sold, was not bought in the past couple of days
The Iraqi Minister of Finance, Ali Allawi, said in a statement issued on Saturday that the devaluation of the Dinar is within the framework of reform. “It is a one-time thing and will not be repeated. The government, along with the Central Bank, will try to keep the new price stable.”
The minister added that his government will work on helping out the poor who will be affected by the measure.
On Saturday, the Central Bank of Iraq announced in a statement that the price of a dollar is set at 1,450 Dinars by the ministry, and that the dollar will be sold to banks at a price of 1,460 Dinars, while banks will sell dollars to citizens at 1,470 Dinars.
“The measure is meant for financial reform, because the government faces a big deficit due to oil prices going down, which has obliged the government to lend money to be able to pay salaries and provide services,” the statement reads.
“The price of the dollar before this measure was a big hurdle in the way of economic growth and the ability of domestic products in competing with imported products.”
The price of dollar before this measure was big hurdle in the way of economic growth
In addition to that of consumables, the prices of imported other goods, like building material, cosmetics and gold, have also gone up.
Nasreen Na’man, who owns a shop for selling cosmetics, said: “Another problem for us and others, which hasn’t been felt yet, is how the debts that were given in dollars.”
Economist Salah Ubaidi thinks that one of the reasons behind the spike of food prices is the leaking of the draft of the 2021 Budget. “This has led to merchants who have invested in the market to take advantage of the situation to make money by selling their goods from their warehouses at a higher price than before.”
video: economist Salah Ubaidi
Ubaidi added that the devaluation of the Dinar is a mistake, and that it has even caused problems for those who trade in dollars. “The government and the Central Bank should have studied the issue with the Ministry of Planning and economic institutions beforehand.”
He predicts the measure will lead to bigger problems, “because salaries remain the same while prices rise.”
