Food Prices Still on the Rise

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Tuesday, July 27, 2021 / 12:15 PM / CSL Research / Header Image Credit: Businessday

 

Rising food prices amidst food scarcity appear to be the new reality, a worrisome situation pushing many Nigerians below the poverty line. According to the selected food price watch data for June 2021 by the National Bureau of Statistics (NBS), prices of consumer staples have continued to rise. Worthy of note is that all the 43 food items under survey increased yearly and monthly. The price increases across the food items lend credence to the persistent rise in food inflation from 15.18% in June 2020 to 21.83% in June 2021. Specifically, beans, the most widely consumed legume among Nigerians, showed a substantial increase in the two variants; brown sold loose (up 62.6% y/y) and white black eye sold loose (up 66.5% y/y).


Prices of food items continue to rise while the disposable income of the average consumer has remained stagnant or in many cases, shrunk significantly with over 50% of total household expenditure spent on food.

 

Available data by the NBS showed 56.65% (estimated at N40.2tn) of total household expenditure was spent on food in 2019 and we expect this to have worsened with the emergence of the pandemic coupled with the spike in food prices seen since last year. With the reopening of the land borders, many hoped for moderation in food prices, but the gains from the reopening are yet to be seen as the structural bottlenecks affecting the entire food value chain persist.

 

Though global food prices have gone up significantly, the key drivers of rising food prices in the country are peculiar and require sustained efforts to stem the tide. The pandemic induced disruptions to the food supply chain caused a hike in food prices across the country. Prices of inputs such as fertilizers have also increased significantly. We note that food inflation which makes up c.50% of the inflation basket has been the major contributor to rising inflation. From Boko Haram insurgency to herdsmen-related attacks to border closure to incidences of flood with poor harvests and FX liquidity challenges, food prices have been pressured in the last few years and is pushing the country towards a food crisis.

 



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