Global surge in food prices is taking a toll on emerging and developing economies, but with greater impact on Nigeria and particularly some states that are neither attracting foreign direct investments (FDIs) nor generating anything internally due to lack of industries and priority
According to Bismarck Rewane, economist and chief executive of Financial Derivatives Company,(FDC) food accounts for 20 percent of consumer spending in the emerging nations and up to 40 percent in Sub-Saharan Africa.
According to Rewane in the current Economic Bulletin 56 percent is reserved for consumer spending in Nigeria.
With analysts forecasting further increase in inflation rate and particularly, food inflation heading towards 18 percent, higher food prices will continue to exacerbate existing macroeconomic issues
This is because, prior to the Russian-Ukrainian war, most of the countries were grappling with high debt levels, currency pressures and inflation, among others.
Consequently, anytime the nation’s inflation figures are reeled out, there should be of concerns to consumers who are at the receiving end.
For instance, the National Bureau of Statistics, NBS, has said that the March 2022 Consumer Price Index, (CPI) which measures inflation rate increased to 15.92 percent, representing a 0.22 percent points rise when compared to 15.7 per cent recorded in February 2022. The bureau also said that the composite food index rose year-on-year (YoY) by 0.09 percent points to 17.20 percent in March, 2022 from 17.11 per cent in February 2022.
However, it further said that the 15.9 percent is 2.25 percent points lower compared to 18.17 percent, the rate recorded in March 2021.
This means that the headline inflation rate slowed down in March 2022 when compared to the same month in the previous year.
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NBS also said that the rise in food index was due to increases in prices of most staples that consumers can hardly do without, making life increasingly difficult. The items include bread and cereals, food product, potatoes, yam and other tuber, fish, meat, oils and fats. NBS said:”In March 2022, the CPI which measures inflation increased to 15.92 percent on YoY basis. This is 2.25 percent points lower compared to 18.17 percent, the rate recorded in March 2021.
But, in the period under review, All Items Inflation on year-on-year basis was highest in Cross River , with 18.42 percent, followed by Kogi with 18.18 percent as well as Gombe with 18.09 percent.
Kwara recorded the slowest rise with 14.03 percent, followed by Osun;14.14 percent and Ogun; 14.22 percent.
Similarly, on month-on-month basis, all items inflation in March 2022, recorded the highest increases in Niger (3.41%), this was followed by Benue with 2.88% and Zamfara with 2.87%, while
Oyo recorded the slowest rise on month-on-month basis with 0.30%, this was followed by Abuja with 0.37% and Jigawa (0.50%).
Food Inflation
In March 2022, Food Inflation on year-on-year basis was highest in Kogi with 22.21 percent followed by Cross River recording 19.86 percent and Kwara, 19.53 percent.
Sokoto recorded the slowest rise in year-on-year food inflation with 14.04 percent, followed by Kaduna and Rivers with 14.66 percent and 14.81 percent respectively. On month-on-month basis food inflation in March
2022 was highest in Anambra with 3.78 percent, followed by Niger with 3.60 percent and Zamfara with 3.31percent.
Oyo recorded the slowest rise on month-on-month inflation with -0.19 percent followed by Jigawa and Ekiti with -0.10 percent and 0.41percent respectively
The analysts also expect the supply disruptions stemming from the ongoing Russia-Ukraine war to continue to push up commodity prices both globally and in the domestic market.
In Nigeria the price of diesel is trading around N750-N800/litre, a far cry from the previous N450/litre seen in January.
The high diesel price is further compounded by the epileptic power supply in the country which is forcing heavy reliance on diesel powered generators for electricity.
High diesel prices have also trickled down into the transportation and distribution costs for food commodities.
“Headline inflation is likely to rise this month and in May as well. The MPC has long held onto its accommodative policy stance but this is likely to change as inflation shows no sign of slowing down, “ Rewane says.
