ANALYSIS: Food Inflation Drops 7 Months After Increase

 ANALYSIS: Food Inflation Drops 7 Months After Increase

For almost two years, Nigeria had faced a gradual increase in the prices of food products. The National Bureau of Statistics reported in March 2021, that the food price Index peaked to 22.95 percent.

According to the Bureau, Nigeria has maintained a two digit Inflation rate since June 2015 when the record rose to 10.04 percent from 9.78 percent recorded in May of the same year.

The rise and fall in the food index are studied from the changes in regularly consumed food in which includes;  Bread and cereals, Potatoes, yam, and other tubers, Meat, Vegetables, Fish, Oils and fats, and fruits.

Meanwhile, the prices of these food products in the local market are dependent on factors including easy availability, supply, transportation, taxes, climate change, imposed restrictions, manufacturing materials and facilities – hence, the variation in prices across states in Nigeria.

The latest report by the NBS places the composite food index rose to 22.72 percent in April 2021 compared to 22.95 percent recorded in March of the same year.

The report contained in the NBS’s Consumer Price Index added that on month-on-month basis, the food sub-index increased by 0.99 per cent in April, down by 0.91 percent from 1.90  percent recorded in March.

Absolute Drop After 7 Months

Twentyten Daily studied the chart released by the Bureau and observed the full percentage increase in the food Inflation from September 2020 to March 2021 before its 0.23 percent drop in April 2021.

In September 2021, the food price index stood at 16.66 percent. This rose to  17.38 in October – a 0.72 percent recorded.

In November 2020, the index rose by 0.92 percent; an increase to 18.30 percent, while in December 2020, the index climbed to 19.56 percent- a 1.72 percent.

At the resumption of the new year, food Inflation rose to 20.57 percent and 21.79 percent in January and February. This was a difference of  1.01 and 1.22 percent respectively.

In March 2021, it peaked by a 1.16 percent increase to a record of 22.95.

This implies that between September 2020 and March 2021; the food Inflation had risen between an average scale of 0.72 to 1.22 percent.

CBN’s Intervention

In April, the Central Bank of Nigeria said it has disbursed N1.487 trillion under its various agricultural programmes to boost food security.

Godwin Emefiele said that the apex bank disbursed N107.60 billion to 548,109 farmers cultivating 703,619 hectares of land between the fourth quarter of 2020 and the first quarter of 2021 to boost dry season output.

“Total disbursements as at end-February 2021 amounted to N1.487 trillion under the various agricultural programmes, of which N686.59 billion was disbursed under the Commercial Agricultural Credit Scheme (CACS).

“The bank also disbursed N601.75 billion under the Anchor Borrowers Programmes (ABP) to 3,038,649 farmers to support food supply and dampen inflationary pressures.

“Under the Targeted Credit Facility, the bank has disbursed N218.16 billion to 475,376 beneficiaries, of which 34 percent of beneficiaries are SMEs” he said.

Reactions to Food Inflation

Reactions from Nigerians, however, claimed that despite the report from the NBS, cost of food products across states are still high.

Emeka Jacob, said, “I haven’t seen any decrease whatsoever expect an increase. We buy food to feed our families and yet it is still insufficient. This means that we spend more on the little we make.”

“I’m determining my prices, I have to consider many factors like the prices of transportation and other things involved in selling the products. So whether I buy food products at low prices, transport and others will still make us sell at a high price”, a market trader explained.

Surveying further at the local market, a bag of rice is sold at N25,000; a bag of beans goes N50,000; 5liters of Palm Oil N2,500 while 25 liters is N15,000. Groundnut oil 5liters is N3,700 while 25 liters N21,000.

However, this price varies on the type, quality and availability of the product in the market.

Food importation Gulp $1.24 billion

However, food products imports gobbled up $1.24bn of the foreign exchange supplied by the Central Bank of Nigeria from October 2020 to March 2021.

This is coming despite the ban directive from President Muhammadu Buhari to CBN to stop issuing forex for food and fertiliser imports

The foreign exchange used for the importation of food products into Nigeria more than doubled in the fourth quarter of last year as against the previous quarter.

The forex used for food products imports, however, rose from $121.13m in September to $198.43m in October, $204.76m in November and $305.88m in December, according to the CBN data on sectoral utilisation for transactions valid for forex.

Forex supply for food imports rose from $163.60m in January to $197.73m in February but declined to $171.05m in March.

Kehinde Ogunyale

Freelance Investigative and Data Journalist

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