According to the selected food price watch data for January 2021 released by the National Bureau of Statistics (NBS), major consumer staples showed significant increases between January 2020 and January 2021. No doubt, the steep price increases across the food items is consistent with the increase in food inflation from 14.85% in January 2020 to 20.57% in January 2021.
Notably, the price of onions, one of the most commonly used vegetables rose 57.77% y/y due to elevated costs of fertilizers, poor harvest, seasonal variations and insecurity. Also, rice which is the most widely consumed food staple showed an increase in the two variants; local sold loose (up 18.56% y/y) and imported high quality sold loose (up 21.69% y/y).
The food supply chain disruptions caused by the pandemic translated to an increase in price across food items in the country. Insecurity in the country ranging from incessant attacks on farmers by herdsmen to banditry and kidnappings have further worsened the situation leading to a greater risk of food crisis.
The move by the CBN to encourage local production by not allocating foreign exchange to importers of food and fertilizers have also contributed to the rise in the price of food items. Added to the increase in food prices is the surge in utility costs which continues to weigh on the average Nigerian consumer.
Despite the recent reopening of the land borders, food prices continue to rise as trade flows are yet to return to normal. According to Fitch, The average Nigerian household spends around 57% of its income on food, and the figure is substantially higher for the 83 million Nigerians who live below the poverty line.
Clashes between farmers and herders continue to impede increased food production and recently obstructing the flow of food from the North to the South. Also, local production still lags consumption significantly. In our view, the government needs to urgently address the insecurity issues and review its agricultural strategy to avert a food crisis.