Nigeria: Worry as Prices of Food Items, Others Rise Steadily
The rising food inflation rate in Nigeria has become a pressure point, an aftermath effect of border closure as investment analysts have indicated. With Nigeria’s land borders under lock, pressure continues to rise following a steep increase in prices of food items and other related daily needs.
Also on the rise is electricity bills, especially for unmetered consumers captured under the estimated payment model.
Transport fare, pharmaceuticals products and medical services are also in the pack contributing to the pressure. MarketForces visits to some markets in the country discovered that most of the daily needs have become so unaffordable.
Leading the market survey, MarketForces Africa Marketing Researcher Ogochi Ndubuisi in her reported that all food items are expensive, excluding some Northern parts of the country.
In her report, she said: “Everything has become so expensive such that monthly take-home cannot take working-class home”. This is an aftermath development associated with Nigeria’s border closure, analysts told MarketForces Africa.
This is happening at a time when the government is struggling to pay N30,000 minimum wages. Meanwhile, the minimum wage offer is equal to getting a bag of local rice cost per month without considering pay as you earn tax consideration.
In the foreign exchange market, Nigerians are paying as much as N470 to obtain the United States dollars, though minimum wage in the dollar term stands at $79 per month. Some think there is a foods crisis, but many analysts are also pointing to a lack of comparative country advantage.
The government policy choice which seeks to protect local industries is making people pay more for goods and services – food, clothing and logistics, especially.
Saying households are paying more for food is an understatement, many families are already struggling to meet daily needs unsuccessfully. Consensus analysts’ estimate about inflation attributed the rise in prices to Nigeria’s government decision to close the land border.
Meanwhile, despite intervention by the Central Bank of Nigeria, prices of rice and other agricultural produce are becoming luxury for average families.
While prices of foods items are becoming unbearable, the unemployment rate and unstable income for families make things worse. MarketForces survey indicates that many families with fixed income sources are slipping down the ladder as purchasing power is trending low.
Unfortunately, this is not a country where income levels adjust to price instability, analysts told MarketForces. With COVID-19 on the street, basic human needs like foods, housing, shelter and transportation for mobility purposes have jerked up significantly.
It would be recalled that there have been questions around the effectiveness of Nigeria’s government border closure policy initially by critics. But the uncontrollable increase in prices of household goods has cast aspersion on the effectiveness of Federal Government land border closure.
Apparently, the policy has neither produce nor safe jobs based on data provided by the National Bureau of Statistics. The unemployment rate in Nigeria kissed the sky at 27.1%, with more than 60% of youths accounting for a large proportion.
With the average price level rising on daily basis across various states, critics have been proven right that border closure would limit the availability of substitutes as Nigeria’s misery index worsen. National Bureau of Statistics revealed that the food index jumped 66 basis points to 16.66% year on year, dominated by increases in prices of farm produce and staple food prices.
In its macroeconomic note, NOVA Merchant Bank pinpointed that the increase reflects the impact of food shortages. This was more than outweighed the decline in core inflation during the month of September. Specifically, analysts said the headline index excluding farm produces contracted 11bps to 0.94% month on month.
When further adjusted for energy-related cost, the headline index fell 15bps relative to the prior month.
According to FEWSNET, the rising prices of food (emanating from farm produce) is largely a result of exacerbated flooding in localized areas of the Northeast and atypically high staple food prices during the extended lean season from April/May through the end of September.
Reflecting the jump, the headline inflation expanded by 13.71%, coming ahead of the August level of 13.22%. Though, it fell below NOVA’s estimate of 13.82%. Data shows that both the food and core index expanded 66bps and 6bps to 16.7% and 10.58% year on year respectively.
Of the various constituents that formed the bedrock for the inflation rate, people are more concerned with the basic needs of life.
Interpreting NBS data, transportation cost has increased 45 basis points, health cost rise basis points and clothing also surged 21 basis points to 11.65%, 12.58% and 11.02%. The tones in the street is a bit worsen than what mere data can explain.
The Nigerian misery index is widening, hunger and deprivation explain some citizens irrational behaviour. The macroeconomic data indicate that the price level is becoming more unable month on month. NOVA said relative to the same period in the prior year, the food index is 315bps higher than the September 2019 level of 13.51%.
Unfortunately, border closure has not stopped rice smuggling into the market. However, there is a small margin between foreign and local rice. The fact that land border closure has locked out substitute products, local producers are selling their inefficiency and of course greediness to Nigerians.
The government has indicated the need to sustained land border closure while using social welfare policies to support people. Unfortunately, the social welfare packages have not had remarkable impacts despite the humongous amount budgeted and spent so far.
It was also discovered that the process for distribution of such packages has been fraught. While COVID-19 lockdown has been eased, the poverty level in Nigeria may have peaked when considered the numbers of people without jobs, the wage and inflation rate at this time.
Read Also: Food Prices Instability: Should Nigerian Border Be Opened?
Nigeria: Worry as Prices of Food Items, Others Rise Steadily
