Global Courant
Nigerians have been grappling with a sustained rise in food prices lately. This is reported by the National Bureau of Statistics in its latest watch food pricesin May 2023, the number of staple foods consumed by everyday Nigerians increased by double digits year on year.
The research included basic food products such as local rice, tomato, bread, fish and beans, among others. The year-over-year increase for certain items has ranged from 10% to a whopping 48%, underlining the tremendous difficulty Nigerians face in accessing three square meals a day.
For example, the average price of 1 kg of tomato increased by 17.68% year-on-year from N423.48 in May 2022 to N498.34 in May 2023. On a monthly basis, the average price of this item increased by 2.73% in May 2023. The average price of 1 kg of rice locally (sold loose) increased by 24.06% YOY from N447.51 in May 2022 to N555.18 in May 2023. On a monthly basis, it has increased by 1.54% from N546 .76 in April 2023.
Similarly, the average price of 1 kg of beans, yam tuber and unsliced bread (500 g) increased by 17.5%, 22.84% and 30.60% year-on-year, respectively. Evaporated canned milk (Peak) in the 170g format witnessed an astonishing 48% price increase.
Given the current economic reality in the country, there are no indications that food prices will fall in the near future. The prevailing trend suggests that prices are likely to continue their upward trajectory.
Nigeria is experiencing double-digit inflation, which is at a prohibitively high rate of 22.41% as of May. Consequently, this has eroded the purchasing power of many Nigerians. The Central Bank of Nigeria has implemented several in its capacity inflationary measuresincluding the Naira redesign and interest rates are rising to the highest level in nearly two decades. However, the story remains the same with food inflation reaching 24.82% on an annual basis.
Even worse, the recent abolition of fuel subsidies and the Naira float are expected to exacerbate existing inflationary pressures in Nigeria, so it is imperative that the government embark on targeted social welfare programs to ease the economic burden on the citizens.
While the promise of rolling out palliative resources for poorer citizens has been accompanied by the elimination of the subsidy, so far there has been a lack of visible economic shocks from the federal government. However, it is worth recognizing the commendable efforts of individual states, such as Borno, in carrying out their interventions. For example, the state government recently 50 luxury buses rolled out and 30 vans to transport farmers from their communities to farmlands for free. This initiative aims to alleviate the high cost of living caused by the withdrawal of fuel subsidies, which has subsequently impacted transportation costs.
Transport costs are an important part of the production costs and high production costs translate into a high product price. By subsidizing transportation, the additional costs that would have been passed on to customers can be eliminated or minimized. While this measure alone is not a definitive solution to curb food inflation, it could potentially help stabilize or reduce food inflation, especially if it were implemented more widely.
Reducing food inflation requires a comprehensive approach, including improving access to credit and raw materials, promoting value chains and investing in infrastructure. This will clearly boost local production and reduce the country’s over-dependence on imported products, which can help fight inflation more effectively than monetary policy.
