Posted by: Armel | February 27, 2008

INFLATION RISK LOOMING…

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Once order is re-established, there is a NEW RISK of GENERAL INFLATION IN CAMEROON.

Coming out of this crisis (short lived hopefully), we can expect in the very short term that the fresh produce markets would impose higher prices on the local consumers. There are many reasons why this will likely happen:

During the “blockade”, none of the usual prime clients (Nigeria, Eq.Guinea, Gabon) was supplied with fresh produce from Cameroon. As soon as the calm is restored, there will be a backlog of orders from those (high paying) clients to fill and doing that immediately creates a hole for local consumers and resellers in Yaounde, Douala and the Great-North. Because of the low level of vegetables stock, the resellers in Mokolo, New-Bell, Tamdja etc…will factor in the risk of a further escalation of violence and raise price substantially. But as in previous and harsher strikes (early 90’s), this will be a short lived situation.

Speculators on the supply side are anticipating the need for people to stack pantries, and fill up refrigerators.

Overall an Influx of cash coupled with these speculative effects are sure ingredients for inflationary risk in the short term.

A N

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